Tax Deductibility

[Freena]

Hi everyone,
Long time reader with a first time post here! Hope someone can help.

I am one of those who is in a fortunate, but unfortunate position in that I had paid off my PPOR (let's call it property 1) and now rent it out while my new PPOR (property 2) has a mortgage. Both properties are in need of renovating, which I have the funds to do but I am thinking that if I were to borrow the funds to renovate property 1, all the interest would be deductible and would offset the rent I receive. The property would still be rented while the reno is taking place. Is this a good way of doing this or would it not really save me in the long run?

Thanks in advance.

 

[Ms Jade]

Welcome, Freena! You are correct that interest in the funds for property 1 would be deductible. This would mean you could use your $ for other things, like offsetting your PPOR mortgage.
How big a renovation are you planning? I'm surprised that you could retain tenants in the property while this is going on.

 

[Rolf Latham]

Hi Freena

If you still have large PPOR debt, look at the option of a PPOR spousal sale or the sale of the PPOR to a unit trust to re gear it in a way that yout tax adviser may approve

ta
rolf

 

[Freena]

Thanks to you both - very much