From: Patrick Bruadair
Hello all,
I?ve prepaid interest on my IP#1 loan for the year to June 2003 (and so saved some tax for year to June 2002). I have plans approved to develop 3 units on the block of IP#1. To allow development to proceed, I intend to refinance the loan on my PPOR. My PPOR lender will also finance the development (separate loan from PPOR), and I will pay out IP#1 loan. Refinancing will release equity in my PPOR, which will be used to finance the early stage of development. There will be fees associated with prepayment of IP#1 loan. These fees I was aware of when I decided to prepay interest for next financial year, so not a problem.
Question is: will I have a problem with the ATO?. I will get a rebate of a large portion of the prepaid interest from my existing IP#1 lender when I prepay the loan. Should I inform the ATO that I have refinanced?. I plan to ask the new lender to structure the refinance package such that the equivalent of this rebate is prepaid to the new lender, so that I remain ?neutral? from a tax point of view. Would this keep the ATO happy, or will the ATO ask me to pay my year 2002 tax saving to them?.
I?ve read through my query a few times, but I?m not sure it?s clear. Hopefully some investor out there understands it, and can offer some enlightenment!
Cheers
Pat
Hello all,
I?ve prepaid interest on my IP#1 loan for the year to June 2003 (and so saved some tax for year to June 2002). I have plans approved to develop 3 units on the block of IP#1. To allow development to proceed, I intend to refinance the loan on my PPOR. My PPOR lender will also finance the development (separate loan from PPOR), and I will pay out IP#1 loan. Refinancing will release equity in my PPOR, which will be used to finance the early stage of development. There will be fees associated with prepayment of IP#1 loan. These fees I was aware of when I decided to prepay interest for next financial year, so not a problem.
Question is: will I have a problem with the ATO?. I will get a rebate of a large portion of the prepaid interest from my existing IP#1 lender when I prepay the loan. Should I inform the ATO that I have refinanced?. I plan to ask the new lender to structure the refinance package such that the equivalent of this rebate is prepaid to the new lender, so that I remain ?neutral? from a tax point of view. Would this keep the ATO happy, or will the ATO ask me to pay my year 2002 tax saving to them?.
I?ve read through my query a few times, but I?m not sure it?s clear. Hopefully some investor out there understands it, and can offer some enlightenment!
Cheers
Pat
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