removing funds from ppor toward new ppor

[investor2009]

Hi

We'd like to move but keep our current ppor. BUT also keep the whole loan on old ppor tax deductible. How to do this?

Basically, we'd like to remove all funds in the offset so the new ppor is mortgage free but old one is tax deductible. Whats best way to do this?

 

[Jamie M]

Hiya

I'm not an accountant so seek pro advice.

If your converting your PPOR into an IP - the current loan balance against that property will become deductible.

If there are funds sitting in an offset against that loan, you should be able to simply move them onto your next PPOR.

Cheers

Jamie

 

[Paul@PFI]

I am a tax agent and if the old PPOR is tenanted its existing loan PROVIDED IT WAS DRAWN TO BUY THE PLACE (ie not a car) will remain deductible. Note my shouty words...I need to be clear. I see many peeps who think just cause loan is mortgage against a property its deductible against that same prop. Not true. If the loan was drawn 100% to buy the place or includes only improvement costs its fine. Otherwise you need to apportion. The loan interest is deductible to the extent the loan purpose for funds drawn was to buy or improve the same prop. Later redraws need to be checked.

Get a valuation (high side) for the old PPOR. It will set the CGT cost base.

Consider land tax. Register anyway that way value creep wont pose a worry later.

Any new loan should not be blended with the old loan. New sub accounts or seperate facilities are best. A broker will understand this and facilitate it.

If old PPOR has a large offset balance when you draw this and use it for new home it will achieve what you intended.