Investment Property Advice - Tax Rebate

[castonism]

Hi,

I've read through as many posts as I could relating to my question but there was no clear answer. I have a IP worth 450 with 120 owing (not due to repayments just value increase). I have a PPOR worth 450 with 400 owing. By chance I was speaking to a finance guy who was dumbfounded that I didn't have my loans the other way around so the interest can be claimed. He stated 'the first thing a mortgage broker would get you to do is switch the loan amounts and everyone has it this way'.

I queried this as I understand if I refinance and take additional monies out it needs to be for income producing purposes otherwise I cannot claim the interest.

Is this just another case of bad advice or is there a way/s to do this so the interest can be claimed. After reading I saw one mention of buying out the other parties (my wife) interests with the money? Either way this guy made it sound like every investor knows so if it is the case then how?

Appreciate any responses.

 

[Aaron_C]

It's not so easy. The 'finance guy' was correct that it's better to have more IP debt than PPOR debt for tax deductibility. But you can't just switch it around - you are right in that the debt has to be for an income producing purpose.

Unfortunately for you all you can really do is continue paying off the PPOR debt as quickly as possible. Any additional borrowings you do from here on in can be used to purchase IPs, and therefore be fully tax deductible.