Hi everyone!
I am quite new to investing, I currently own an apartment in Melbourne CBD, 300k loan and my PPOR.
I am getting married at the end of the year, she just bought a house and we will move in together after the wedding, I am wondering what is the best way to manage my apartment, as it will become an investment property.
1. Once I move out, will I be able to deduct the entire interest from the 300k loan?
2. Is there a way to increase the loan on apartment to pay down the loan from the new house (and deduct the increased interest payments)? With the 300k loan it will be quite heavily +ve geared
Would be awesome if someone could help out here..thanks in advance
Cheers!
G'Day,
Welcome to the world of property investing! Yes the interest on the $300k or the loan balance at the time of the property becoming an IP is tax deductible. However you cannot increase the loan amount against the IP and claim the additional interest. Deductible interest is applicable for the purpose of the funds. Since you are using the funds to pay down your PPOR, this makes you eligible to claim the additional funds.
Regards
Shahin
TheFinanceShop | Elite Property Finance
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Further to what's been mentioned above. When/if you decide to access equity in that property, make sure it's set up as a separate loan of the new funds are being used for non investment purposes so you can identify your non-deductible debt from your deductible debt.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Since he is from Victoria, is he able to "sell" the property to his spouse without incurring stamp duty, she takes out the loan for maximum value on the apartment and makes it into an investment, and he just happens to use the excess money for the new PPOR?
Or do I have my wires crossed somewhere?
Cheers
Tom
Tom, no need for the " " as that is exactly what can happen in VIC. Sell to a spouse for full market value with no stamp duty!!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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And the original loan interest would generally be deductible – but only on the lowest loan balance. So if the loan reduced lower than $300,000 and you topped it off with redraw then the interest on this second part would not be deductible
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Thanks for the responses everyone
I was thinking about the selling to spouse part, wouldn't it be hard for her to get a loan for such a high amount?
Whether you could get a loan or not would depend on the circumstances. Best to talk to a broker about that bit. It may be difficult if your spouse has just bought a house, but the projected rental income from your property will be included in serviceability.
Also you may want to hold off a bit and do it down the track.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Rocket. the Title could be in the wife's name and the loan in joint names.
I have a deal we have been referred here in Qld from a Solicitor and that exactly what is happening.
Trouble here there is Stamp Duty payable.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
PLC wrote:So therefore, the spouse can then legally claim the full loan value as deductible debt, even if it is above the original amount, yes?Yes, it would be just like a normal purchase.
see
ATO ID 2001/79 http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID200179/00001
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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