Remortgaging an investment property

Viewing 4 posts - 1 through 4 (of 4 total)

Cherry
Participant
@cherry
Join Date: 2014
Post Count: 1
March 7, 2014 - 6:51 am
Hi all,
Hope somebody can help with this query.
We have an flat in London, with a large amount of equity. At the moment it is on a Capital repayment mortgage and we have to pay tax on the income we earn from it. I was thinking a better option would be to re-mortgage it on an interest only loan and invest the money in a property here in Australia. We would have approx 520 AUD cash to spend on an IP. If I put most of this money in an offset account against an interest only mortgage then the repayments should be very low and I can claim the tax back on the interest on the mortgage, is this correct?
Also is it possible to put the rent from the property to pay my home loan, without any tax implications? The property in London would be a tax loss and we would have to make up some of the repayments.
any advice is greatly appreciated!
Catalyst
Participant
@catalyst
Join Date: 2008
Post Count: 1,404
March 7, 2014 - 7:33 am
Your payments would be very low and hence your tax returns would be very low. You only claim against what you pay.
You can have the rent go wherever you want. If your interest is low then you'll be cash flow positive and you'll pay tax on the surplus.
Speak to an accountant before you make any decisions.
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
March 7, 2014 - 2:57 pm
Good luck in refinancing the UK property when you are not earning GB Pounds.
Recent changes to UK lending legislation has meant that you will not find a lender to allow a release of equity unless you are an expat earning GBP.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
March 8, 2014 - 2:15 am
Cherry wrote:
Hi all,
Hope somebody can help with this query.
We have an flat in London, with a large amount of equity. At the moment it is on a Capital repayment mortgage and we have to pay tax on the income we earn from it. I was thinking a better option would be to re-mortgage it on an interest only loan and invest the money in a property here in Australia. We would have approx 520 AUD cash to spend on an IP. If I put most of this money in an offset account against an interest only mortgage then the repayments should be very low and I can claim the tax back on the interest on the mortgage, is this correct?
Also is it possible to put the rent from the property to pay my home loan, without any tax implications? The property in London would be a tax loss and we would have to make up some of the repayments.
any advice is greatly appreciated!
Basically no that is not correct.
A mortgage is a form of security so you wouldn't remortgage it but increase the loan. Borrowing money may be deductible depending on what the money is used for. Parking it in an offset can destroy deductibility. Ideally set up some sort of LOC.
But then you have to consider the international tax aspects and the exchange rate aspects as well as the general legal advice. Increasing the loan would not increase the deductions you could claim on that property.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au