remortgage

[IP001]

Hi All

Can you re mortgage a PPOR to use if for Investments and then say in a few years if you then move out is that loan tax deductible still?

Are there any rules with remortgaging your PPOR?

 

[Jamie M]

Hi there

I'm not quite following the question but the general rule is that you apply the purpose test to determine deductibility of the loan.

If the purpose is investment related - then the loan should be deductible. If it's for non investment purposes such as a PPOR loan then it wouldn't be deductible.

Cheers

Jamie

 

[IP001]

Hi there

I'm not quite following the question but the general rule is that you apply the purpose test to determine deductibility of the loan.

If the purpose is investment related - then the loan should be deductible. If it's for non investment purposes such as a PPOR loan then it wouldn't be deductible.

Cheers

Jamie

Hi Jamie

The purpose at this time will be for investment but down the track i do not know at this point. so as its investment intended now I would assume its deductible .. Can it then change at a point in time can it? or does it remain investment related and claimable as that is the original purpose

 

[Jamie M]

Hi again

The purpose can change. Just make sure you've spoken with your accountant and finance person about this so the right structure is set up.

Cheers

Jamie

 

[Rob G.]

Do you mean redraw against the equity in your PPOR ?

Cheers,

Rob

 

[IP001]

Do you mean redraw against the equity in your PPOR ?

Cheers,

Rob

Hi Rob

Not sure what term you use.

I mean getting a new loan against a paid off PPOR and place into a savings account and use for Investing

the intention is for investing at this point

 

[Terry_w]

Hi Rob

Not sure what term you use.

I mean getting a new loan against a paid off PPOR and place into a savings account and use for Investing

the intention is for investing at this point

Risky in my opinion. I would say probably you would lose the ability to claim the interest.

More risky if you leave the t out of Mortgage too.

I would suggest you use a LOC rather than placing borrowed money into a savings account. Borrow from the LOC to invest and pay the interest each month.

 

[Rob G.]

Moving out of the paid off PPOR and turning into an IP does not entitle deduction of mortgage interest.

What you have used to borrowed money for determines interest deductibility.

This purpose is not restricted to intial purpose.

If you sell some of your financed investments and do not repay the loan with the proceeds, then the purpose is deemed to have changed to that extent.

Cheers,

Rob

 

[Witzl]

Hi Rob

Not sure what term you use.

I mean getting a new loan against a paid off PPOR and place into a savings account and use for Investing

the intention is for investing at this point

Talk to your broker and accountant about getting this set up correctly for your specific situation....
.... but the way we have done it in the past is get a set amount of equity in our PPOR mortgaged with a redraw facility or offset account attached, putting all the funds from the mortgage into that redraw/offset.
The funds that are then available in that redraw/offset account get used SOLELY for investment purposes - IE, the deposit and ingoing costs for purchasing an investment property, renovating that property, etc.

What I like to do is ONLY use funds from that mortgage for investment purposes, and NOT use any of it for personal stuff - otherwise you are "contaminating" the loan, and this gets messy for accounting (your accountant will hate you).
If you need funds for personal use, set up a separate mortgage account.


I hope this is info is helpful in steering you towards asking the right questions of your broker and accountant.