Taking Equity From IP , Think I Have Made A Mistake

[Emily_Zac]

Hi Guys

I have just had a sudden thought regards some re-finance I have done...

Nov 06 Bought 1st IP and put down $82k deposit (the 20%)

May 07 bought IP 2 put down 5% deposit (using another loan)

Jul 07 did tax return did not claim my 1st year of the 5 write off the 82k (thought you had to wait til you sold)

Aug 07 sold and bought new PPOR and decided to re-finance the 1st IP and take $80,500 back out for our POPR, pay LMI om IP and carry on .

I think (and hope I am wrong) that I should not be claiming neg gearing on that portion of the loan and that I should of paid CGT on the 82k ......Will I get away with this as I did not claim the write off on my return

Any info anyone

Thanks

Martin

 

[yo yo ma]

Hi Martin
I can't quite understand what you sold... Is it your old PPOR you sold & bought a new one?
Also I can't understand why you are talking about CGT... You only pay this when you sell an IP.

I am not an accountant but it sounds like you may have changed the purpose of your loan when you refinanced (not good). Some accountants on here will be able to give advice but sounds like you need some specific advice from your own accountant...

 

[Emily_Zac]

Thanks for reply

Yes it was my PPOR bought and sold

 

[bort]

Hi Guys

I have just had a sudden thought regards some re-finance I have done...

Nov 06 Bought 1st IP and put down $82k deposit (the 20%)

May 07 bought IP 2 put down 5% deposit (using another loan)

Jul 07 did tax return did not claim my 1st year of the 5 write off the 82k (thought you had to wait til you sold)

Aug 07 sold and bought new PPOR and decided to re-finance the 1st IP and take $80,500 back out for our POPR, pay LMI om IP and carry on .

I think (and hope I am wrong) that I should not be claiming neg gearing on that portion of the loan and that I should of paid CGT on the 82k ......Will I get away with this as I did not claim the write off on my return

Any info anyone

Thanks

Martin

Borrowing 80,500 for a PPOR would most likely mean that any interest incurred in future is not deductible.


Why would you pay CGT on the 82k? you didnt say you had sold IP1 and CGT is only incurred when you sell an IP.

Also what makes you think you could write off the 82k over 5 years in the first place. You cannot write off a deposit against tax.