Hi All,
If a wife has the PPOR in her name only including the attached loan and over time builds up enough equity that can be drawn out, and she then draws that money out and does nothing with it, it isn't tax deductible as the purpose of the redraw is of a private nature.
What if she lends that money to her husband to buy an investment property and charges him the same interest rate her bank is charging her, can he claim the interest expense as his borrowed money purpose from her is investment but she has no claim for interest on the money she lent him? Would she need to include this as income though.
This way releasing equity in her property so he can buy an investment.
Why would you do this? Wife owns PPOR in her name only but investment is in husbands name. So he doesn't have to include a big non deductible debt when he goes to borrow each time. Banks usually include the entire debt on a property even if in two names. This way the husband never needs to declare a huge non deductible debt to them when he borrows. He only has income producing investment debt. This way if the investments go belly up the bank can't take the PPOR. Yes she would technically still owe all that cash she lent him but hopefully not lose their PPOR which is untouchable for his debt as it is in her name.
Is this correct?
If a wife has the PPOR in her name only including the attached loan and over time builds up enough equity that can be drawn out, and she then draws that money out and does nothing with it, it isn't tax deductible as the purpose of the redraw is of a private nature.
What if she lends that money to her husband to buy an investment property and charges him the same interest rate her bank is charging her, can he claim the interest expense as his borrowed money purpose from her is investment but she has no claim for interest on the money she lent him? Would she need to include this as income though.
This way releasing equity in her property so he can buy an investment.
Why would you do this? Wife owns PPOR in her name only but investment is in husbands name. So he doesn't have to include a big non deductible debt when he goes to borrow each time. Banks usually include the entire debt on a property even if in two names. This way the husband never needs to declare a huge non deductible debt to them when he borrows. He only has income producing investment debt. This way if the investments go belly up the bank can't take the PPOR. Yes she would technically still owe all that cash she lent him but hopefully not lose their PPOR which is untouchable for his debt as it is in her name.
Is this correct?