ppor kept negatively geared??

Hi
I have set up a trust structure and currently have one ip, owned by the trust, and then a ppor.
I am thinking about transfering the ppor into my husbands name and negatively gearing it as much as possible and putting the equity into the ip which would then be positively geared.
Can you keep extracting the equity from the ppor (which will become a rental property not owned by the trust) into other properties and offset the loss against my husbands taxable income? Can you do this long term as long as the ppor keeps increasing in value?
Thanks
 
Hi July,

Yes !
You certainly can continue to claim the interest from the PPOR loan indfinitely, as long as you can show that the funds are for IP use. The ATO will follow the money (use), not the asset it is borrowed against. However if your PPOR is already mortgaged for non IP fund use, you would have to make a clear split of use for additional funds. This can be messy but split loan options tend to help differentiate the purposes. Once again, time frame is no problem, justifying the tax deductability is the real issue. The same applies whether the property is PPOR, IP or PPOR which will later become IP.

However I just realised that the funds will be going to IP held by a Trust, I guess in that case for tax deductability you would have to "loan" the borrowed funds to the Trust, as if you gifted it, the borrowing costs would not be deductable.

I think it would be good to hear some professional or better informed advice here, which I'm not able to give. So I'll opt out now. Good luck with things.
 
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