Debt swapping

[dockerboy]

Hi,
I own shares outright worth 80k.

My Ppor mortgage is 180k on a house worth 1.2M

I have 2 investment properties worth about 900k and mortgages of about 850k.

I am paying off my ppor mortgage by extra payments and channelling all rental income into it.

The investment mortgages are capitising the interest until the home loan is paid off..

Question for the Forum:

should I sell the shares and reduce my ppor mortgage, then do a limit switch into my investment mortgage and rebuy a package of shares,thus swapping the debt from personal to investment , ie tax deductible debt ?

What would you do in my circumstances ?

My goal is to pay off the ppor, but I am not sure what to do after that. I do want to build a passive income so that I may have choice about work in about 5 years, but at moment this will depend on a significant capital growth in order to reduce the investment debt..

thanks to this forum for great information.

 

[Terry_w]

It could be a good idea as interest on $80k would be about $4000 pa and this is the amount your tax deductions could decrease by.

However, selling shares means a Capital Gains tax event. How much tax would you need to pay?

Also if you buy back the same shares they may have gone up after you sell them which means losing out.

Check with the accountant to see whether it could count as a 'wash sale' too.

As for the capitalising of interest. Have you received tax advise on this? It could be that the interest is not deductible.

 

[dockerboy]

Thanks Terry
Yep, i need to do the maths to determine the best
Return. With interest low at moment, keeping the homeloan as is and holding the shares may be the best option.

 

[Rolf Latham]

A debt recycling strategy using equity available in your PPOR may be of beneft to whittle away at that non deductible to deductible debt ratio

ta
rolf