LOC interest

[Pablo]

Hi,

we are moving out of our current PPOR and into our new purchase and will be renting out our current PPOR. However we wish to change ownership of the current PPOR into both names as it is solely in my name. If the transfer happens before we move out (say by a couple weeks) and we paid for the stamp duty from a LOC will the interest be tax deductible even though it was our PPOR at the time?

I think it would be but I just want to check beforehand.

Thanks.

 

[Ms Jade]

That's an interesting one. i would think that your partner could probably claim their half, as SD is a cost to the buyer. You already own the property so you are not borrowing in order to actually secure the income-producing asset. That means you can't claim. I assume, BTW, that the LOC is in both names despite the house only being in yours?

 

[Pablo]

Hmmm yes i didn't look at it that way, the LOC is in both names, but if my wife can claim the interest I may have to set up a LOC only in her name or pay for the stamp duty out of my own funds.

Any other opinions?

 

[StuartW]

Hi,

we are moving out of our current PPOR and into our new purchase and will be renting out our current PPOR. However we wish to change ownership of the current PPOR into both names as it is solely in my name. If the transfer happens before we move out (say by a couple weeks) and we paid for the stamp duty from a LOC will the interest be tax deductible even though it was our PPOR at the time?

I think it would be but I just want to check beforehand.

Thanks.

Maybe a better idea is to transfer the property 100% into your partners name after you have purchased the new home. That would allow you to re-gear the property to 100% and reduce your non-deductible debt. This may or may not be appropriate and would depend on many things including the type of property, partners income, occupation and so on. Just a thought.

 

[Perth Investor]

I'm with Stuart...

 

[Pablo]

Good idea Stuart,

The only problem is that we plan on turning the new PPOR into an IP in 5 or so years so we want to keep the debt on it, I guess I could look into putting the money into a offset account.

Thanks I'll think it over.