Hi guys, hoping to get some help......My father-in-law is taking a Home Equity Loan out in his name (and we are paying it off P & I and loan set up costs ect) for us to use as our 20% deposit on an IP we are purchasing.
We also need to renovate this property spending about $6,000 which we intend taking from our own Home Equity Loan before it is rentable (to a good standard).
I understand that the interest on the $6,000 we are taking from our H/E loan is tax deductable and the interest on the loan we are taking out for the IP is tax deductable.
Our goal is to get the property re-valued and re-financed say 6 months down the track and pay back the father-in-law, but after reading some of the posts it looks to me like we won't be able to tax deduct the amount we re-pay him as it will be a straight up withdrawal of the money and transfer into the loan he took out to clear things up with him...
Any ideas on how best to use the money he is lending us - maybe the reno's and use our own H/E loan for deposit. Any advice on this would help as I just don't know what to do for the best. Hope this is not too confusing!! sq
We also need to renovate this property spending about $6,000 which we intend taking from our own Home Equity Loan before it is rentable (to a good standard).
I understand that the interest on the $6,000 we are taking from our H/E loan is tax deductable and the interest on the loan we are taking out for the IP is tax deductable.
Our goal is to get the property re-valued and re-financed say 6 months down the track and pay back the father-in-law, but after reading some of the posts it looks to me like we won't be able to tax deduct the amount we re-pay him as it will be a straight up withdrawal of the money and transfer into the loan he took out to clear things up with him...
Any ideas on how best to use the money he is lending us - maybe the reno's and use our own H/E loan for deposit. Any advice on this would help as I just don't know what to do for the best. Hope this is not too confusing!! sq