PPOR to IP

[Terrain]

Hi all,

Now my PPOR is worth around 400K with debt of 100K, with 30k in an offset account. I require most of this 30k for personal expenses next yr.

I own one IP with no debt with brother worth 330K.

I am looking at converting my PPOR to a IP, I want to increase the loan from 100K to 170K and put the additional funds into my offset account. Then evenutally next yr buy another PPOR with these funds as a deposit.

Now is this OK from a tax point of view, will the 170K be deductible. Is there are other considerations here? Is ther a better way, so that I can increase good debt and reduce bAd debt.

Thanks!

 

[Rixter]

Its the purpose of the drawings that determines deductibility. If you are drawing to use funds for PPOR then the interest on those drawings will not be deductible. If you used the funds for investment then they will be deductible.

Hope this clears it up.

 

[Terrain]

I thought this might be the case. Is any other strategies. I don't really want to sell the ppor to a trust.

If I was to stick to the above then it would be prudent to set up a separate loan account. Right?

Just working through the strategies I need to reduce bad debt.

 

[Lucky88]

PPOR to investment

Hi all

I am in a similar predicament. PPOR in Sydney valued about six months ago at $550,000. No debt. Have a LOC of $400,000. Want to make PPOR the investment (will rent for $450 a week maybe even $500). Then buy a new PPOR near the beach. Hubby and I have ony one dependent, and earn around $150,000 between us.

Hoping to get a bargain with prices falling in the next few months because of the recession etc. What best way to finance new PPOR? Am I being too ambitious?