Moving from PPOR to IP (PPOR to become an IP)

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ExplodingZombies
Member
@explodingzombies
Join Date: 2012
Post Count: 1
May 25, 2012 - 2:34 am
Hi all
First time poster, long time reader. Some general advice or ideas about my situation would be great. I’ll be seeking an Accountants advice, just in the planning stage. Sorry if this has been asked before, I did try and have a look.
I currently have a PPOR and an IP, both these properties have debts on them. I wish to rent out my current PPOR and move into the IP. I would like to combine or refinance the current IP debt with the existing PPOR debt prior to occupying the IP.
The obvious reason is to maximise the interest deductions and have a PPOR that is debt free. So my question is:
Is this allowable or does the ATO take a dim view of this sort of transaction?
Thanks for reading and your help.
Cheers
Eddie
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
May 25, 2012 - 4:03 am
not possible to increase the loan and claim the interest because you will be borrowing for thenew ppor. its the purpose that counts
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
May 25, 2012 - 9:25 am
What Terry said.
Tax deductability is determined by purpose.
If the purpose of the loan isn't investment related (in this instance to pay down a PPOR debt) then it's not deductible.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Mortgage Broker assisting clients Australia wide Email: [email protected]