Positive to Negative

[mcb25]

Hi, currently I have 2 investment property (A & B) which is positively gear. so I plan to make this 2 property to become negative gear to reduce my tax.
My idea is to refinance this 2 property and withdraw the money and use it either.
1. Buy another investment property ( C ) & make it owner occupy after 1 or 2 years.
The problem what happen with the interest after the property ( C ) becomes owner occupy & the loan are come from investment property (A & B).
Can I still claim the interest in investment property for the money that use in owner occupy property.
I think ATO check the first intention, If it true, It means I can claim the interest for the withdraw of investment property.

2. Leave the money in my loan account and use the money to pay the interest.
So after few year the investment property becomes negatively gear & I received all the money from rental without any expenses.

Do you think any of the above approach can work ?

 

[JoshyBoi]

The interest won't be deductible after it becomes your PPOR...withdrawing equity in A&B to buy C can be a messy accounting affair if it eventually becomes a PPOR...

 

[bene313]

can be a messy accounting affair if it eventually becomes a PPOR...

Kept clean if a separate LOC is set up to the value of the available equity (rather than increasing the loan amounts).

 

[bene313]

The objective of making investments is to increase ones after-tax income, not reduce it! Investing purely to reduce tax is a strange decision.

 

[wobbycarly]

Hi, currently I have 2 investment property (A & B) which is positively gear. so I plan to make this 2 property to become negative gear to reduce my tax.
My idea is to refinance this 2 property and withdraw the money and use it either.
1. Buy another investment property ( C ) & make it owner occupy after 1 or 2 years.
The problem what happen with the interest after the property ( C ) becomes owner occupy & the loan are come from investment property (A & B).

No problem. It's the purpose of the loan, not the security that matters.

Can I still claim the interest in investment property for the money that use in owner occupy property.

No.

I think ATO check the first intention, If it true, It means I can claim the interest for the withdraw of investment property.

The original purpose of the loan is to buy an income-producing asset, so the loan interest will be tax-deductible. As others have pointed out, when the asset become a private asset (your PPOR) then the interest will be no longer tax-deductible.

2. Leave the money in my loan account and use the money to pay the interest.
So after few year the investment property becomes negatively gear & I received all the money from rental without any expenses.

Do you think any of the above approach can work ?

Sorry, don't understand this second point.

 

[mcb25]

Thanks for the advise