Hi there,
I am looking at purchasing a residential investment property on a double block of land. My aim is to subdivide the property and create two 16 perch lots. I will sell the vacant lot and retain the investment property for some time.
My question is, will I have to reduce the debt obtained to purchase the property (and fund the subdivision) with the sale proceeds of the vacant lot?
Or can I pay the proceeds off my current non-deductible home loan?
If I reduce my own home loan with the proceeds I will be left with an investment property that is worth approx $360,000 with a deductible debt of approx $460,000. Would the ATO have a problem with this as long as I pay the relevant CGT on the sale of the vacant lot?
Any help would be appreciated.
Regards
Brad
I am looking at purchasing a residential investment property on a double block of land. My aim is to subdivide the property and create two 16 perch lots. I will sell the vacant lot and retain the investment property for some time.
My question is, will I have to reduce the debt obtained to purchase the property (and fund the subdivision) with the sale proceeds of the vacant lot?
Or can I pay the proceeds off my current non-deductible home loan?
If I reduce my own home loan with the proceeds I will be left with an investment property that is worth approx $360,000 with a deductible debt of approx $460,000. Would the ATO have a problem with this as long as I pay the relevant CGT on the sale of the vacant lot?
Any help would be appreciated.
Regards
Brad