Transfering loan security from a sold property to another IP

[bigals]

Transfering property security to another property when selling

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I am looking at selling my IP that is used for security for a loan that I used to buy another IP. I technically own the 2nd IP but used the security from the first.
Can I 'transfer' the security /loan to the 2nd IP without impacting on my interest tax deductions.

Reasoning: normally when you sell a property you pay the loan out.

I don't want to pay it out as it is my interest component for my second IP. Hope that makes sense.

Cheers

 

[Peter_Tersteeg]

Transfering a loan to another property is easily done, assuming you've got enough equity in the new security to cover the loan. In most cases you simply contact the lender, tell them what you want to do and they can make it happen.

There may be some interesting tax implications for what you've described. You probably should discuss with an accountant, but event then you could get different opinions.

 

[Erin Woods]

Does an application for transfer of security generate a credit hit on you file- the same as a new loan application would?

Also- if there is an existing loan against IP2, will the lender accept using the equity as security but taking a second mortgage?

 

[bigals]

Thanks for the replies Peter and Erin.

I have sufficient equity in IP2 and no other finance on it. I am trying to get my ducks in a row to be informed of what I may be able to do should I decide to sell. My biggest question I am working on is whether to sell.

The Brisbane market appears to be finally moving in the better direction and as I own IP1 (apart from it being security for IP2) I recall many years back that somebody said "if you don't have many deductions, then find a property that does". I too enjoy positive gearing but also see the benefits in negative.

What do most people do when they own an IP, sounds a silly question but this is the first one I have paid out and am happy for peoples views on retaining or sell and borrow more to get say closer to a CBD? Or split the money and buy say two IP's? Certainly easier to keep.

Obviously CGT is an issue.

Cheers

 

[SK Investments]

Many would use the income from the CF+ property that you already have to offset a CF- property in a desirable location prime for capital growth.