IP to PPOR - initial deposit/costs deductibility question...

[JIT]

Hi there,

If I used 100k from a LOC secured against an IP as the deposit + costs on another IP (with another separate loan for the rest of the funds for this, say a further 500k loan), then that 100k is tax-deductible I believe.

What if in 2 years time though, I decided to move into that IP and make it my PPOR?

Is that initial 100k amount still tax-deductible??

If the initial intent of those funds (the 100k) were for a tax-deductible purpose, will the deductibility be maintained if the intended use of the property changes down the track, ie. to a PPOR/non-deductible debt?

The 500k amount in the above example would of course be non-deductible.

Thanks

 

[Ms Jade]

Aah, if only it could be done, JIT. As soon as the IP becomes a PPOR the $100k is no longer deductible despite the "original" loan purchase. What would be handy is if the $100k was a separate LOC. Then you can pay off that 100k down the track to get rid of your PPOR debt (assuming you would wish to do so).

 

[JIT]

Thanks Ms Jade, that's what I suspected.