All Topics / Help Needed! / Investment property capital cost
Hi,
I intend to redraw my current home loan to pay off the deposit for the investment property I want to buy.
Is the redraw amount counted as part of the capital cost which makes its interest from my current home loan tax deductible?
Thanks heaps
John
any help appreciated!
Hi John
Is your current home loan an owner occupied or investment home loan?
If owner occupied, it would be best to set up a second loan split instead of redrawing the funds. This is due to the need to distinguish deductible from non-deductible debt.
By simply redrawing the funds, you face the risk of contaminating deductible debt amongst non-deductible debt.
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]
Thanks, Jamie
The current home loan is owner occupied.
how should split work if I am going to get my investment loan from a different bank?
Cheers
Sean
Hi Sean,
Not Jamie and not a broker but it would work like this.
Establish a line of credit facility secured by your PPOR. The size of the line of credit should be large enough to cover your expected deposit and purchasing costs. This will roughly be 25% of the purchase price of the property.
At the same time your broker should be setting up another core loan (assume 80%) secured against the new IP.
If you haven't got a broker onto the job then I suggest you get in touch with Jamie. Get him to do the lot.
Yep, what Derek said (sorry – forgot to check back on this thread).
So you'd have two loans set up against your PPOR (original loan and equity release for the IP deposit/costs) and one against your IP.
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]
got it!
thanks all!
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