Hi all,
I'm just starting out with property investment and now have IP1 under contract which settles in three weeks. Finance for the IP is a 5% interest only 3 year fixed loan for 80% of the value of the house(255k) at 204k for this.
To fund the shortfall for the IP (approx. 60k) on this purchase I have mortgaged my PPOR, which previously I owned outright. This loan is for 220k(80% of house value) and is a variable loan with an offset account attached. This will settle in the next few days with the funds being placed in the linked offset account ready to be used when the IP settles a few weeks later.
What I am concerned about is maintaining the tax deductibility of interest on the PPOR loan. As this loan settles earlier than the IP itself will this have an impact as the purpose of the loan for investment hasn't been fulfilled. It will be sitting around doing nothing for 2 weeks.
Also the loan only has a single offset account, so I planned to have all my income/expenses both personal and investment related running through this offset account. Will mixing these contaminate this loan and knock out my tax deductibility. Do I need to separate these out.
I did look through the forum and couldn't find this exact situation, but my apologies if it has already been covered.
I'm just starting out with property investment and now have IP1 under contract which settles in three weeks. Finance for the IP is a 5% interest only 3 year fixed loan for 80% of the value of the house(255k) at 204k for this.
To fund the shortfall for the IP (approx. 60k) on this purchase I have mortgaged my PPOR, which previously I owned outright. This loan is for 220k(80% of house value) and is a variable loan with an offset account attached. This will settle in the next few days with the funds being placed in the linked offset account ready to be used when the IP settles a few weeks later.
What I am concerned about is maintaining the tax deductibility of interest on the PPOR loan. As this loan settles earlier than the IP itself will this have an impact as the purpose of the loan for investment hasn't been fulfilled. It will be sitting around doing nothing for 2 weeks.
Also the loan only has a single offset account, so I planned to have all my income/expenses both personal and investment related running through this offset account. Will mixing these contaminate this loan and knock out my tax deductibility. Do I need to separate these out.
I did look through the forum and couldn't find this exact situation, but my apologies if it has already been covered.