Hi forum users…
Quick question if I purchased a house 5 years ago for 300k and then put an additional 100k boats/cars/weddings etc and now the place is worth 500k with a 400k loan.
How much of this is tax deductable if I make this property an IP. Further to that if I borrow another 50k to buy a caravan on the current loan bringing it to 450k is that tax deductable also?
I understand if you pay down you can't claim, but I do not know what happens if you go the other way.
Thanks guys
Mick
Of all of your debts only the portion that relates to the original property will be deductible.
Edit unless the car and boat were business deductions
mickm007 wrote:How much of this is tax deductable if I make this property an IP. Further to that if I borrow another 50k to buy a caravan on the current loan bringing it to 450k is that tax deductable also?
Would be nice
Like Derek said, only the funds linked to the actual property will become deductible.
If you are seriously considering turning this into an IP in the future then it might be a good idea to convert the loan to IO sooner rather than later. It might also be a good idea to split out the original loan from the increases that you've carried out for consumer debt (your accountant will be thankful).
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]
Hey Mick, exactly the topic I wanted to ask but couldn't find a pervious thread about it. Wondering if someone could comment on my situation (not wanting to start a new thread or take over this one)
I built my PPOR a couple of year ago, loan for $380k been paying that down pri+int
Currently have not borrowed against it yet est value $450k
Loan is setup with a redraw facility and my pay goes straight into it with about $100k in there offsetting the loan
If we want to maybe change this to an IP some 5-8 yrs down the track what to do now?
am I better to change this to interest only now, get rid of the redraw facility and setup an offset account (should have set this up 1st but didn't want to pay the monthly off set acount fee)
will the entire loan amount still be tax deductible? having the redraw fac in effect currently.
Thanks Guys, sorry Mick
Wayno
Wayno,
It is very late in the game, since you have been depositing and withdrawing virtually none of the interest on your loan may be deductible.
Each deposit into the loan is a repayment and each withdrawal is a new loan. So the amount of hte loan that relates to the original purchase of the property would be much much smaller than the minimum balance on your loan.
You need to seek tax advice.
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
Thanks Terry, that's exactly what I thought was the case, I tried to explain it to my tax accountant but probably didn't word it right.
Is there a work around that anyone knows of, like refinancing the loan of similar..
Wayno,
There is no work around. All you can do is to work out what the deductible proportion would be (hard) and then split the loan. into 2.
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
Bugga…
Cheers Terry
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