What is a 'Regulated' loan and do I need to get out of it?

Hi team,

I purchased a PPoR last year with an IO loan and offset account. 20% depostit (to make the bank happy). I'm moving out in two weeks and will be renting. My PPoR will become an IP. I was under the impression that I could then claim interest on the 80% as a deduction when the purpose changed. But someone said I may have a regulated loan that I have to refinance to get out of so I can claim the interest as an expense? (When I got the loan I probably said it was for personal purposes.)

Can someone please confirm if I'm going to have to refinance or get my loan to be unregulated?

Thanks,
Sometimes clueless. :confused:
 
I was under the impression that I could then claim interest on the 80% as a deduction when the purpose changed.
Your impression was correct....and if you had to borrow the 20% deposit from somewhere then the interest on that is tax deductible too.

But someone said I may have a regulated loan that I have to refinance to get out of so I can claim the interest as an expense? (When I got the loan I probably said it was for personal purposes.)
You have to be careful of the uneducated someone's in your life. ;) This is pure BS.

Can someone please confirm if I'm going to have to refinance or get my loan to be unregulated?
No, you do not have to refinance. Just claim the interest. And also get a QS report and claim depreciation too.

All the best.
 
Hi team,



Can someone please confirm if I'm going to have to refinance or get my loan to be unregulated?

Thanks,
Sometimes clueless. :confused:

Hi DB

Usually not. The lender wont mind usually unless you dont pay your bill :)

What is possibly worth ensuring though is that you have an Interest Only loan. If you currently have a PI loan, most lenders allow a simple switch.

Some, like ANZ as an example will require a whole new loan app.

ta
rolf
 
Thank you both.

I do have an Interest Only loan. It's good to know my original research did pay off. I just have to trust myself more! -without going so far as to be arrogant. :)
 
hey there DB,
You might also consider getting a valuation done on the property to establish a cost base for CGT should you sell in the future...;)

Boooooooooods
 
hey there DB,
You might also consider getting a valuation done on the property to establish a cost base for CGT should you sell in the future...;)

Boooooooooods

I thought if you sell an IP that started as a PPOR, under certain circumstances there's no CGT. I think you have to be in it more than a year, maybe two?
 
I thought if you sell an IP that started as a PPOR, under certain circumstances there's no CGT. I think you have to be in it more than a year, maybe two?

You can avoid CGT on a property that started as your PPOR if you sell it within 6 years of making it an IP (or move in and back out again every 5 3/4 years to restart the 6 year rule). But this only applies so long as you don't have another PPOR in that time. You can only ever have one PPOR at a time with the exception of when you are selling one PPOR to buy another you have a 6 month grace period where both can be claimed to be your PPOR for CGT purposes.
 
Hi Douglas

One interesting point from the new Natioanl Credit Code (NCC) that comes into being on 1 July 2010, is that all loans to individuals for the purchase of residential investment property, will be "regulated" by the new NCC.

Cheers, Paul
 
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