I have a friend (who is a lurker here and won’t ask her own questions) who has a situation with an IP so I thought I would ask a question on her behalf.
She purchased an IP last year and put up 20% of her own cash as deposit plus the associated costs and borrowed the remaining 80%. She did this despite the fact that she had a large, unused LOC secured against her home!!! The main reason was to make the cashflow appear better than it was (but that’s another thing entirely). The property is in her personal name and she is claiming all costs and the interest of the 80% loan against rent and her personal income.
The question is – is it possible for her to write herself a cheque from the LOC to repay the ‘cash’ she provided for this investment and then claim the interest on this amount? In this way borrowings for the IP would be increased to 105% and she would claim all of this interest against income. There is no non-investment debt in the LOC to muddy the calculations.
A long shot but I guess it is effectively refinancing yourself – or something like that….
She purchased an IP last year and put up 20% of her own cash as deposit plus the associated costs and borrowed the remaining 80%. She did this despite the fact that she had a large, unused LOC secured against her home!!! The main reason was to make the cashflow appear better than it was (but that’s another thing entirely). The property is in her personal name and she is claiming all costs and the interest of the 80% loan against rent and her personal income.
The question is – is it possible for her to write herself a cheque from the LOC to repay the ‘cash’ she provided for this investment and then claim the interest on this amount? In this way borrowings for the IP would be increased to 105% and she would claim all of this interest against income. There is no non-investment debt in the LOC to muddy the calculations.
A long shot but I guess it is effectively refinancing yourself – or something like that….