All Topics / Help Needed! / Investment property capital cost

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of JohnJohn
    Participant
    @jcar11457
    Join Date: 2010
    Post Count: 23

    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

    Profile photo of JohnJohn
    Participant
    @jcar11457
    Join Date: 2010
    Post Count: 23

    any help appreciated!

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    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 Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of JohnJohn
    Participant
    @jcar11457
    Join Date: 2010
    Post Count: 23

    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

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    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.

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    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 Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of JohnJohn
    Participant
    @jcar11457
    Join Date: 2010
    Post Count: 23

    got it!

    thanks all!

Viewing 7 posts - 1 through 7 (of 7 total)

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