We were bulding an IP using a big builder when we got an estimate of our Principal residence and decided to sell it, which we have. ($140k profit over 2 yrs!!)
We are going to move into the Investment property and then build a new Principal Place of residence.
We will only have a loan for the IP (which will become our PPR) of about $35K when we move in, but will need to borrow to build the new PPR.
Question:
Can we borrow the money to build the PPR then move into it and move the debt into a Interest only loan against the IP (up to the value of the original IP) to claim the interest generated against the loan against the income. I know there is lots more to the tax side of the IP that you can claim, but am just interested in how the ATO will see this debt movement.
If you dont understand what I mean please ask a question so i can clarfiy it as I would really like to get some answers please.
I personally cant see a problem and the bank has told me they can to the loans that way, but will the ATO have issues with this?
Cheers and Thanks
We are going to move into the Investment property and then build a new Principal Place of residence.
We will only have a loan for the IP (which will become our PPR) of about $35K when we move in, but will need to borrow to build the new PPR.
Question:
Can we borrow the money to build the PPR then move into it and move the debt into a Interest only loan against the IP (up to the value of the original IP) to claim the interest generated against the loan against the income. I know there is lots more to the tax side of the IP that you can claim, but am just interested in how the ATO will see this debt movement.
If you dont understand what I mean please ask a question so i can clarfiy it as I would really like to get some answers please.
I personally cant see a problem and the bank has told me they can to the loans that way, but will the ATO have issues with this?
Cheers and Thanks