2 IPs and capitalising interest

Currently I am living in PPOR. Valued @ $420K owing $255K
Interest variable @ 5.54%.

IP # 1 Bought @ $305K. Valued @ $350K. Rented out @ $340/week.
Interest locked in @ 9.00% (ouch).

We are thinking of making our PPOR as IP # 2 and renting it out @ $350/week on a loan owing $255K.
Because Wife wants to move into a better house.

We have to live somewhere so we rent a wife approved house for ourselves @ whatever is affordable.

My questions are
1. I will still be neg gearing if I make PPOR as IP....but to what extent ?
2. Would ATO allow me to neg gear on 2 IPs ?
3. If I get a LOC to pay for expenses of 2 IPs....Can I then capitalise interest and channel all the rent from both IPs to pay into a principal in IP # 1 with a view to make it PPOR further down the road ?
 
Hiya

All 3 properties once rented will form part of your tax position.

Much depends on whose name the properties are in, and what the taxable income of those owners is.

In general its no good chasing more gearing if your taxable income is already quite low

ta
rolf
 
Thanks Rolf,

" All 3 properties once rented will form part of your tax position "

3..?? Not 3....Just 2 IPs.

IP # 1. 90 % on my name & 10 % wife.

Current PPOR (future IP # 2 ) 50/50 ownership between me and wife.

" In general its no good chasing more gearing if your taxable income is already quite low "

I am about 70K/yr and wife on 35K/yr gross. So I think we are okay to neg gear on both ( correct me if I am wrong )

We will be paying rent for a house for ourselves to live in ( May be to someone here @ Somersoft )
 
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