HOW TO - Use equity to fund deposit for home loan

Viewing 9 posts - 1 through 9 (of 9 total)

Woody1986
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@woody1986
Join Date: 2010
Post Count: 57
October 15, 2013 - 5:56 am
Hi Guys
I am currently in the process of using equity from commbank property to buy a property although i am going through bankwest for the loan
What would be the best way to do this to make sure the deposit is tax deductible and not mixed with personal funds
Is it best to
1) Top up my existing loan by the amount required (20k for e.g) and the bank pays this straight to the real estate?
I just dont want funds to get mixed up with personal account . When topping up a home loan account do the funds sit in the home loan account ? or does commbank transfer these to my personal account to pay the real estate?
Thanks guys in advance
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
October 15, 2013 - 6:03 am
Hi Woody
Is it a PPOR or an IP that you have with CBA?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Woody1986
Participant
@woody1986
Join Date: 2010
Post Count: 57
October 15, 2013 - 7:29 am
Hi Jamie
Its an IP
I have just received the loan docs and I am concerned as the loan doc says it replaces the old loan ( I have 2 splits one and the one I am topping up is $54k and topping it up to $78k)
The wording in the doc mentions "paying out the $54k " of the existing loan and making a new loan of $78k. I would then just get a bank cheque to pay the extra funds to the real estate for the 5% deposit. I remember reading a while ago that there can be issues with this and if its done wrong it can make the funds non tax deductible?
Cheers
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
October 15, 2013 - 10:15 am
Hi Woody
As long as it's all used for IP purposes it should be ok in terms of deductibility. Is that what you're concerned about?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Terryw
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@terryw
Join Date: 2001
Post Count: 16,213
October 15, 2013 - 10:57 am
Was the $54k deductible? And if son, will it always remain deductible?
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
PLC
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@plc
Join Date: 2012
Post Count: 400
October 15, 2013 - 11:35 am
If you're buying an IP as well, then as mentioned above it should be ok as long as the existing debt is also fully deductible and the funds go directly on the new purchase.
If you're buying a PPOR then it will cause issues.
Cheers
Tom
PLC | Phoenix Loan Consulting
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Woody1986
Participant
@woody1986
Join Date: 2010
Post Count: 57
October 15, 2013 - 7:19 pm
Hi guys. Yes the other loan is an IP loan so it should be all good. Thanks for your replies. Much appreciated
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
October 15, 2013 - 10:19 pm
Should be fine then.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Ryan McLean
Participant
@ryan-mclean
Join Date: 2010
Post Count: 547
October 17, 2013 - 4:17 am
As long as the purpose of the loan is for investment purposes it should be tax deductible even though the loan will technically be secured using a different IP to the new one you are buying.
If your borrowing money to go on a holiday then you might have some issues
Ryan McLean | On Property
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