Increasing Portfolio

W

WebBoard

Guest
From: Mike .


Next Move
From:
Date: 06 Oct 2000
Time: 13:33:08

I am looking for some options to move forward with my current situation, I have just paid off my mortgage on my home and the property was recently valued at $550K. I have an IP valued at $230K returning 220pw rent, and a share portfolio valued at 40K with mixed return. Both the IP and the Shares have an underlying loan of 260K.

While we have paid off the family home it has become too small and we need to move to a larger place, I know I will need to spend at least 250K more to achieve this (Sydney prices). This is fine but I wish to increase my Investment portfolio also.

I have thought of pulling the mortgage to the maximum on the current family home and converting this to a an IP and using this cash as a deposit on the new house. the problem with this approach is that I will not be able to generate a rental income on the this property to make it a pos cash flow IP. What other options do I have? Is this plan I have outlined legal, what would the ATO think?

Thanks in adavance
 
Last edited by a moderator:
W

WebBoard

Guest
Ian W

Reply: 1
From: Mike .


Re: Next Move
From: Ian W
Date: 06 Oct 2000
Time: 16:05:02

Hi

You ex family home, now IP2, will probably always be cashflow positive.

If you borrow against it, to finance a new primary residence, the ATO looks at the purpose of the loan, not the usage of the security (property) when determining the deductibility of the loan interest. That is, the interest on a loan to buy your own residence is not tax deductible.

Try going into the forum archive and doing a search.

Try earlier forum entries for a bit of light reading (there are more)

"Claim Previous Home Interest". Sue 12/11/99

Converting current home into an IP? Richard 6/27/00

Time to move...Any suggestions Don 6/5/00

Ian W
 
Last edited by a moderator:
Top