Selling an IP to pay down PPOR

[birchcorp]

Hi Terry

We will soon be selling an IP to reduce PPOR debt.

Would we be able to use the equity in another IP to get a LOC to pay the CGT? And would the interest be deductible?

You may use the equity, no problem here, but the interest is not tax deductible. i.e. it is not an expense that has related to creation of assessable income.

 

[Terry_w]

It is a good idea to have a private ruling from the ATO.

I also provide this reference:

ATO ID 2001/79

Issue

Whether interest on funds borrowed to acquire the share of the taxpayer's spouse (the spouse) in a property, to be kept for investment purposes is deductible.

http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID200179/00001