Hi all. The following setup is what i plan to do with the purchase of my second IP.
I currently have a savings account used only for investing. My rent goes into it aswell as the shortfall from my pay account. The loan repayments are also taken from this account. I plan to do this with IP number two so i will then have two lots of rent going in and two loan repayments going out. No top up required on IP number two as it will be cashflow neutral.
Does this make sense so far.
Now i also have a LOC that i used for IP number two ( Deposit and upfront costs). I also plan on using the LOC for property repairs and improvements and also shortfall in rent in the event of a vacancy or non payment.
From what i understand the LOC interest only remains deductible as long as you still own the investment. Therefore i must keep records of what LOC funds are spent on each IP. Is this what other people do.
So if say IP one has a tennant that does a runner and im $1000 down i would in this situation use $1000 from the LOC to top up the Ip savings account. Correct?
Now if i sell that property in the next year i would have to pay back that $1000 in order for the LOC to remain 100% tax deductible for the remaining property. Is this right.
I guess this could be said also if i say did a $10,000 reno on Ip number one. If i later sold it i would also have to pay that back to keep the LOC 100% deductible for the remaining property.
So i guess you must keep accurate records of you LOC transactions in preperation for any possible Property sale in the future.
I currently have a savings account used only for investing. My rent goes into it aswell as the shortfall from my pay account. The loan repayments are also taken from this account. I plan to do this with IP number two so i will then have two lots of rent going in and two loan repayments going out. No top up required on IP number two as it will be cashflow neutral.
Does this make sense so far.
Now i also have a LOC that i used for IP number two ( Deposit and upfront costs). I also plan on using the LOC for property repairs and improvements and also shortfall in rent in the event of a vacancy or non payment.
From what i understand the LOC interest only remains deductible as long as you still own the investment. Therefore i must keep records of what LOC funds are spent on each IP. Is this what other people do.
So if say IP one has a tennant that does a runner and im $1000 down i would in this situation use $1000 from the LOC to top up the Ip savings account. Correct?
Now if i sell that property in the next year i would have to pay back that $1000 in order for the LOC to remain 100% tax deductible for the remaining property. Is this right.
I guess this could be said also if i say did a $10,000 reno on Ip number one. If i later sold it i would also have to pay that back to keep the LOC 100% deductible for the remaining property.
So i guess you must keep accurate records of you LOC transactions in preperation for any possible Property sale in the future.
