Hi all, I have a question regarding re-financing. Currently I have PPOR valued around 500,000 and owe about 250,000 and a IP valued around 600,000 and owing around 395,000 (on interest only loan). My question is there any way I can re-finance so that I can increase LVR on IP and use that money to pay my PPOR?
Re-financing PPOR and IP
- Thread starter antaree
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- lvr ppor re-financing withdraw
antatree - you can do that but it won't achieve what you're hoping to achieve, as it is the purpose of the loan that determines whether it is deductible or not, NOT the security. So you could end up with a situation where you owe $0 on your PPOR and $500,000 on your IP but the deductible debt is still only $395,000.
Hi Aaron,
Thanks for the reply. I didn’t quite understand your answer, so if I bring my PPOR down doesn’t that mean I’ll be paying less repayment on PPOR but repayment of the IP will go up. But when it comes to tax deductively on IP repayment I can only claim part of that repayment not the full repayment is that what you mean?
Rolf – yes it’s always been an IP.
Thanks for the reply. I didn’t quite understand your answer, so if I bring my PPOR down doesn’t that mean I’ll be paying less repayment on PPOR but repayment of the IP will go up. But when it comes to tax deductively on IP repayment I can only claim part of that repayment not the full repayment is that what you mean?
Rolf – yes it’s always been an IP.
Yes, that's correct. It just means all your loans are attached to the IP but the tax deductibility of it remains the same.
If you have a spouse you may be able to transfer the IP to your spouse and let them take on the full loan. There is no stamp duty for this type of transaction for a property in Victoria.
Hrmmm yes sneaky VIC's, other states don't have this...
I have some clients who are still willing to do this and pay the stamp duty, mainly new miners / families who have gone from $60k - $150K+ and now paying alot of tax. The deductions outweigh the stamp duty over a period
Thanks wobbycarly, we both are on similar income so I don't think moving the property to her name will achieve much tax benefit.
yes.
but any interest on the extra money wont be deductible because it would have been borrowed to pay private debt.
Look into borrowing to pay investment expenses.
Am I mistaken, or is the idea that your spouse then "pays" you to "purchase" the property and the deductable loan amount can increase?
rofl .
Yes, one spouse would buy the other spouses property at full market value and borrow to do so.
You're not mistaken.
We did this with a Qld property that was originally 50/50 when we were both on decent wages. When Mrs Wobbycarly stopped working, we were willing to pay the $6k or so stamps to transfer 100% to my name. I think it took 15 months (from memory) for payback. I basically "bought" her half.
Correct, 100% legal. You are paying stamp duty on the full value of the property, only fair that you can also claim the full value also
