another deduct qu

[john doe]

Hi all,

This qu got lost in another thread. I'm just wondering if anyone can confirm if this calc is correct? It's pretty easy (I think) but I just want to double check.

*PPOR in the name of both wife and me (tennants in common), as is the home loan. P&I home loan, but making minimum repayments.
*Loan remaining on PPOR = $150k total.
*Previously the loan was paid down to $130k, but $20k was redrawn to purchase shares in my name.

*IF property is worth $350k, and I purchase my wife's half for $175k, then is the TOTAL tax deductible loan to me:

$175k + 130k/2 + $20k = $260k

with the deductible loan against the property being:

$175k + 130k/2 = $240k

and the remaining $20k being deductible against the shares.

Cheers

John

[bundy1964]

Hi John

The shares you can claim for.

The PPOR loan in either single or joint names will be a deducable problem........are you going to charge the Mrs rent?

bundy

[john doe]

HIya Bunday,

Woops. I should have mentioned that our current PPOR will become an IP once I buy my wife's half. The money I have paid my wife to buy her half will be used to pay her half of the remaining loan and then as a deposit for our new PPOR.

Cheers

John

[Les]

G'day John,

Since the purpose of the loan "appears" to lead to purchasing another PPOR, I would tend to think you would be on shaky ground if you were audited.

The previous "purchase wife's half" would likely be considered to be a "contrivance" to avoid tax. Please get professional advice on this one....

Disclaimer: Usual - the above is purely an opinion

Regards,

[john doe]

Hiya Les,

Yeh, I also was concerned about the point you raised regarding the whole setup looking like I just want to borrow to purchase another PPOR. So I asked this question on this thread:

http://www.somersoft.com/forums/showthread.php?threadid=6118

So it looks like it's above board. But I'll clear it with my accountant (once I get one. I'm ditching my current one)

Cheers

John

[Les]

G'day John,

Geez, I'm glad I put that disclaimer in - now, you understand why :D :D

But, yeah - this does sound complicated, so go with professional advice,

Regards,