I know there are 1000's of threads on PPOR to IP, but I couldn't find one that fitted our circumstances.
We purchased our current PPOR 5 years ago and had a loan for $280K, value at the time was $500K. Loan was P&I with Redraw, no offset account.
We paid off the loan about 12 months ago and decided to refinance to purchase an IP. The product we initially had was a bit of a fizzer and wasn't going to meet our needs long term, so we refinanced with another institution for 60% IO of current valuation ($750K). On settlement we withdrew all funds and parked them in an offset account.
Move forward to today, and we still haven't bought an IP (for various reasons) but are now considering upgrading our PPOR and turning our current PPOR into an IP, so my question is - what interest component is deductable? The current loan amount, the original loan amount or nothing?
For asset protection purposes, we do have a trust arrangement setup for investing, and may just sell the current PPOR into the trust when we convert it to an IP. If we did this I understand the loan the trust gets would be 100% deductable and that stamp duty would be payable.
I have a meeting with the accountant on Tuesday to discuss this further and seek specific advice, but I'm interested in exploring the options and understanding what's ahead of me before we meet. Idea's and comments appreciated
Cheers
Buddybee
We purchased our current PPOR 5 years ago and had a loan for $280K, value at the time was $500K. Loan was P&I with Redraw, no offset account.
We paid off the loan about 12 months ago and decided to refinance to purchase an IP. The product we initially had was a bit of a fizzer and wasn't going to meet our needs long term, so we refinanced with another institution for 60% IO of current valuation ($750K). On settlement we withdrew all funds and parked them in an offset account.
Move forward to today, and we still haven't bought an IP (for various reasons) but are now considering upgrading our PPOR and turning our current PPOR into an IP, so my question is - what interest component is deductable? The current loan amount, the original loan amount or nothing?
For asset protection purposes, we do have a trust arrangement setup for investing, and may just sell the current PPOR into the trust when we convert it to an IP. If we did this I understand the loan the trust gets would be 100% deductable and that stamp duty would be payable.
I have a meeting with the accountant on Tuesday to discuss this further and seek specific advice, but I'm interested in exploring the options and understanding what's ahead of me before we meet. Idea's and comments appreciated
Cheers
Buddybee