Hi All,
My first post here. Would appreciate any inputs.
I have recently purchased an investment property, however now wish to move in it (making it residential). There is a very small loan left on my current residential property ( and a bigger loan on investment). If I make my current residence investment it starts positive gearing( we are not able to save any tax). I checked with my banker and he seem to be ok to restructure the loan that is – move some loan from the bigger loan( current investment) to the lesser loan( current residence).As properties are cross collateralized and no further lending he seem ok to do it. I was wondering if I can negative gear once the loan gets bigger on my current residential property( converting to investment)? If not any suggestions whether we can move to the house and still have negative gearing tax benefits?
thanks.You’re banker doesn’t have a clue :-(
Speak with an accountant rather than a banker on taxation matters. The banker isn’t going to help you when the ATO come knocking.
What they’ve suggested you can do is incorrect.
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]
Hi Barcode,
Welcome to this good place !! I am glad you stopped by to ask – and, I reckon YOU will be happy you did too. Why?
Well, already you have had one really GOOD answer from Jamie. The banker really does have no idea, and, if you are interested in investing, it is worth knowing more about these things BEFORE you take any action.
To help, have a read of this link below, to see if that changes your mind about moving into the investment property (the first line in his post should do it I reckon…) ;)
https://www.propertyinvesting.com/topic/4410245-to-buy-ppor-first-or-investment/#post-4696164Now that post came from a link in the following thread, and I suggest it is worth reading the whole thread to get the “big picture” about investing:-
https://www.propertyinvesting.com/topic/4410491-the-big-picture-for-new-readers-especially/If that gets you asking more questions, then I’d see that as a good thing. Anyway, it is good to have you aboard – I hope it proves to be beneficial for you,
Benny
moving money around between loans won’t increase deductions, but it will result in a mixed loan and may actually decrease teh amount of interest you can claim.
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
Nothing surprises me these days especially coming out of a Bankers mouth.
Tell him loan deductibility is dependent on the purpose of the loan and not the security.
Secure your investment property loan against a pogo stick and the interest repayments will be deductible.
Subject to how the property is held there might be a way around it.
Course need to balance out the cost of doing so with the end benefit.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Many thanks Jamie,Benny,Terry and Richard for you inputs. This is great forum. valuable insights.
Poor advice, poor structure (cross collateralised), poor results. Your banker has really done a dousy on you.
As noted above, the ATO looks at the purpose of the funds, not what they’re attached to. Simply shuffling the money around will not increase deductions, but will potentially pollute your loans and make your ability to claim deductions become more difficult.
If I were you I would be getting my situation looked at it to see about removing that cross collateralisation and any other mistakes the banker has likely done while you can, before it becomes a problem in the future.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
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