I have a similar situation to this gentleman: http://somersoft.com/forums/showthread.php?t=86993
My wife and I have a house in Vic as joint tenants. It's on a standard P&I loan and due to extra repayments it is now only owing 1K with 150K redraw available. The house is worth 400k.
If I do this:
My questions to the experts are:
My wife and I have a house in Vic as joint tenants. It's on a standard P&I loan and due to extra repayments it is now only owing 1K with 150K redraw available. The house is worth 400k.
If I do this:
- Redraw the full 150K into our bank account.
- I borrow an additional 200K to buy out my wife's share. Maybe this can be done as a refinance? I believe this transaction is exempt from stamp duty in Vic.
- Rent out the house (which is now in my name), making it IP.
- My wife and I use the funds (including the one in step 1) to buy a second property as PPOR.
My questions to the experts are:
- At the end of these steps, will I be able to deduct interest rate payments from the first house?
- Has the redraws and the extra payments in that first loan 'contaminated' the tax deductability of the loan on the first house?