My situation is as follows and I wondered if someone had some advice:
Loan 1 - $424k (IO), value $530k, joint owners - intend demolishing, rebuilding as PPOR within 12 months.
Loan 2 - $435k (IO), value $725k, joint owners, current PPOR - refinanced, with $135k redraw.
New building cost - $400k. Can I use the equity in Home 2 for building Home 1 as PPOR, and then rent Home 2 as investment (negative geared) claiming expenses against income to save tax. I understand ATO would not allow this. As joint owners, can I purchase partners 50% of Home 2 and use these funds for building new home and then negative gear as principal owner. Will have to pay stamp duty but am earning in super tax bracket and would get maximum tax benefit. Would have to consider CGT if I sell home later on.
Thanks
Loan 1 - $424k (IO), value $530k, joint owners - intend demolishing, rebuilding as PPOR within 12 months.
Loan 2 - $435k (IO), value $725k, joint owners, current PPOR - refinanced, with $135k redraw.
New building cost - $400k. Can I use the equity in Home 2 for building Home 1 as PPOR, and then rent Home 2 as investment (negative geared) claiming expenses against income to save tax. I understand ATO would not allow this. As joint owners, can I purchase partners 50% of Home 2 and use these funds for building new home and then negative gear as principal owner. Will have to pay stamp duty but am earning in super tax bracket and would get maximum tax benefit. Would have to consider CGT if I sell home later on.
Thanks
