Is it possible to reorganise loans if you have a large POP loan (non-tax deductible) and 2 smaller loans on IP's? Can you redistribute the debt so that the debt on the IP's is increased and the debt on the POP is reduced to increase the overall tax deductibility on the debt? And would you have to refinance with a new lender in order to do so? Or any other way out of this financial disaster!!
Hi Godiver
It's not that simple.
You can re-gear debt but it will involve selling the assets to a new entity or a spousal sale.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie has nailed it in one.
I have 101 clients who have done similar however it does come at a cost.
Normally depending on the State you are in there is Stamp Duty payable on the Transfer.Still depending on how long you intend to stay in the property can be well worth it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hello,
In short no you can't redistribute debt.
that is why it's best to use offset account from the start to avoid this happening, because you can redistribute saving from offset account from deductible to non deductible offset account debt.
In saying this , I heard there are accountants out there who would "redistribute" the debt, but just up to the purchase price only
This is not legally correct. ATO might not caught this if you're small but definitely will catch if you're a big player.Hi Godiver
I would also seek advice from a tax professional about transferring any assets to a spouse solely for a tax benefit; I'm pretty sure that you may be caught under the anti-avoidance rules of the ATO.
Tim McGrath, Tick Mortgage Solutions
[email protected]
Ph (03) 9877-7077Tim,
You are right. Everyone should get tax advice from a lawyer and/or accountant.
But have a look at ATO ID 2001/79
http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID200179/00001Issue
Whether interest on funds borrowed to acquire the share of the taxpayer's spouse (the spouse) in a property, to be kept for investment purposes is deductible.
Decision
The interest is deductible under section 8-1 to the extent that the borrowed funds are used for the purposes of producing assessable income.
—
But the ATO could still apply Part IVA
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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