Claiming Interest in your IP that was previously my PPOR

Hi,

I was wondering what the rules were around claiming interest on an investment property that was previously your PPOR. Since I have paid down my loan on my PPOR loan (as you do when you are living in your own place and trying to frantically pay the loan off) and have an amount in redraw now .

But now I have moved out of the property and rented it out and now is an IP. Therefore at the moment I pay no interest for the IP however since now I want to but my next home what are my options?

1. Can I redraw the amount from this IP and then use the funds to purchase my next home? (I was told you can't use the money from investment loan to buy a property that does not produce income)

2. Can I refinance this IP and redraw up to 80% of the loan - if this is the case, will ATO allow me to claim interest over and above the original loan (I was told the ATO will only allow me to claim interest up to the amount of principle remaining on the ORIGINAL LOAN - and any amount gained in refinancing you cannot claim)

What are my options here.

Thanks
 
Hiya

What the ATO has provided seems to be the correct concensus.

There are ways you can possibly "re gear" the property, perhaps by selling to a partner or to a unit trust, but youd need specific tax advice,

Interesting how often this comes up. Too many people underestimate the true value of an offset account and "what if" analysis, which most bankers, brokers and advisers get soooooooooooooooooo wrong.

ta
rolf
 
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