Switching homes

[mustbnuts]

Hi,

We're currently looking at upgrading to a bigger home but would like to keep our current one as an IP. The ideal situation would be to have an interest only loan on the IP and then a small P&I on the new home - possibly having the IP slightly positively geared so as to service some of the P&I.

I've heard that this can be done but then I've heard that it can't!! Has anyone done this sort of thing before and if so are there any hints or info you may have? For example our broker (who said it could be done) told us that we need to change the titles. I assume that this is so the majority of the IP would be in my name since I am the main breadwinner and would get the maximum tax benefits.

On the other hand I have heard via an accountant that it can't be done.

Any suggestions??!!

 

[julia]

Mustbnuts

Have a look at ID 2001/79 about your spouse selling his or her share to you and I recommend you get your own ruling. You could also have a read of my claimable loans booklet under free publications on www.bantacs.com.au on how to work the loans and there is quiet a few interesting questions in this regard in the Tax Straight Up Q&A section of AUgusts Australian Property Investor Magazine.

 

[HandyAndy888]

From what I know, you have to change the title to owners in common or something like that...then you can split the rental income unevenly...I hope I'm right...when I moved out of my PPOR and it became an IP, there was no worries...make sure you get an evaluation to reduce CG Tax later...

 

[Rolf Latham]

Hiya

im not an accountant, but in general I would have though a "sale" would have to take place to increase the claimable amount ?
ta
rolf

 

[mustbnuts]

Thanks everyone for your comments even though it's taken a while for me to get back. I've dug a little deeper on this and confirmed that I need to buy out my wife's share to get the best tax advantage to gear the property. Not a problem but I just need to pay thousand's on stamp duty simply to make it 99/1 instead of 50/50. Them's the breaks unfortunately but don't get me started on the way our state govts tax on property!!