So here is my situation. I own two properties, 'A' and 'B'.
'A' used to be the PPOR. I took out about $80k equity from 'A' to buy property 'B' which become my IP for about a year. This was done by splitting the 'A' home loan into two and switching the loan to IO.
Recently moved into 'B' and hence 'B' is now my PPOR. Currently in the process of renting out property 'A', so it will soon become my IP.
The question that I'm struggling with now is what to do with the $80k loan, since the loan is no longer attached to an IP, thus my understanding that it's no longer tax deductible? Should I switch the loan back to P&I to reduce down my non tax deductible loan?
Property 'B' (or current PPOR) loan is setup as an IO with an offset account. My cash reserves is currently parked inside the offset account. Would it be a good strategy to use some of the cash to pay down the $80k loan and reduce my liability?
Appreciate any comments for the forum regulars. Thanks.
'A' used to be the PPOR. I took out about $80k equity from 'A' to buy property 'B' which become my IP for about a year. This was done by splitting the 'A' home loan into two and switching the loan to IO.
Recently moved into 'B' and hence 'B' is now my PPOR. Currently in the process of renting out property 'A', so it will soon become my IP.
The question that I'm struggling with now is what to do with the $80k loan, since the loan is no longer attached to an IP, thus my understanding that it's no longer tax deductible? Should I switch the loan back to P&I to reduce down my non tax deductible loan?
Property 'B' (or current PPOR) loan is setup as an IO with an offset account. My cash reserves is currently parked inside the offset account. Would it be a good strategy to use some of the cash to pay down the $80k loan and reduce my liability?
Appreciate any comments for the forum regulars. Thanks.