changing PPOR to investment

[jasonc]

From: Jason C


Ok guys I am not sure if this will make any sense or if it is possible but i will try and get it all out...
Say you have a home that is worth in rough figures $300 000 and at present $160 000 or so is owing, this home being your place of residence. And you are looking at moving to another city, Turning the home into a rental and purchasing a new home in the other city. The new home being somewhere around the high $100 's Now is it possible to use the equity in the current home to put a large deposit on what will become the PPOR and increase what is owing on the CURRENT PPOR so as to gain the maximum tax advantage when this property becomes a rental?
Now I am not sure if that makes any sense to anyone out there, but any thoughts or other possibilities would be greatly appreciated.
Thanks
Jason

 

[Marina]

Reply: 1
From: Marina .


Jason,

You can certainly redraw the equity on the current PPOR, and use that as a deposit on your new PPOR, but you will not be able to claim the interest on the new borrowings, but you will be able to claim the interest on only the $160K .

It is the purpose of the borrowings that determines the tax deductibility.

If you were to redraw the equity to buy another rental property or to buy shares than you would be able to claim the interest on the extra borrowings.

I hope I have answered your question

 

[Rolf Latham]

Reply: 2
From: Rolf Latham


HI JC

This ones been done to death. MLs got it sussed, though you will find floggin the PPOR to your family trust will regear it - attendant duties and quarantine of losses may not suit though.

Ta

Rolf