Dear forum members
I'm a newbie and appreciate any veteran or expert to advise me. Here's my situation.
My wife and I have a house in Melb as PPOR. The property is worth $600K and our remaining loan is $300K.
I'm planning to move to 2nd house in another suburb as PPOR and rent out this 1st house. Rental will be less than interest payable.
I plan to draw down equity in my 1st house to pay for 2nd house. Refinancing up to 80% of $600k = $480K. Additional fund = $480K - $300K = $180K to pay for 2nd house deposit.
My questions are:
1. Can I use the refinance figure of $480K or the latest loan balance of $300K as my negative gearing component? I have checked with two separate accountants and they both gave me different answers. One said you can only use the latest loan balance of $300K - this is the only legal option by ATO. The other said you can draw down to $480K provided that you do so prior to converting the PPOR to IP - is this legal? If so everyone in Aus will be drawing down to 80-100% of their fully owned house to max negative gearing?
2. Another option I have been advised is to ask the partner to sell her portion of 50% share to myself. This will give me 50% of $600K = $300K new loan on top of my current loan portion (50% of $300K = $150K). Total = $450K to be claimed as negative gearing. This will need to be done with a lawyer about $2K in fee - this apparently is legal. If the couple split the family office will still divide the house 50% equally regardless if the wife has sold that portion to the husband. The purpose is to max negative gearing.
Appreciate your views.
cheers - PCYC
I'm a newbie and appreciate any veteran or expert to advise me. Here's my situation.
My wife and I have a house in Melb as PPOR. The property is worth $600K and our remaining loan is $300K.
I'm planning to move to 2nd house in another suburb as PPOR and rent out this 1st house. Rental will be less than interest payable.
I plan to draw down equity in my 1st house to pay for 2nd house. Refinancing up to 80% of $600k = $480K. Additional fund = $480K - $300K = $180K to pay for 2nd house deposit.
My questions are:
1. Can I use the refinance figure of $480K or the latest loan balance of $300K as my negative gearing component? I have checked with two separate accountants and they both gave me different answers. One said you can only use the latest loan balance of $300K - this is the only legal option by ATO. The other said you can draw down to $480K provided that you do so prior to converting the PPOR to IP - is this legal? If so everyone in Aus will be drawing down to 80-100% of their fully owned house to max negative gearing?
2. Another option I have been advised is to ask the partner to sell her portion of 50% share to myself. This will give me 50% of $600K = $300K new loan on top of my current loan portion (50% of $300K = $150K). Total = $450K to be claimed as negative gearing. This will need to be done with a lawyer about $2K in fee - this apparently is legal. If the couple split the family office will still divide the house 50% equally regardless if the wife has sold that portion to the husband. The purpose is to max negative gearing.
Appreciate your views.
cheers - PCYC