Hi everyone
I'm new to property investing so this may seem like a silly question to most of you, but I just want to check.
My partner and I have just bought our first PPOR together. We each have an IP in our names plus last year we bought an IP in joint names.
To put together our 20% deposit on the PPOR we used cash together with a withdrawal from my partner's IP (this used to be his PPOR and was making extra repayments each month to pay down the loan and had around $60k extra he could access without taking out a new loan/refinancing) plus he also got a "top-up" loan for $30k to tap into the equity in his IP, so now the IP has two loans against it. His unit was valued at $410k and the loan before we took out the $90k was $240k.
As far as I understand it, and please correct me if I am wrong, is that the interest on the $30k top up loan from the equity in the IP is definitely not tax deductible as this did not go towards purchasing an income producing asset. What about the $60k in extra repayments he had made over the past 5 years to pay down the principal on the original loan when it was his PPOR, as this was able to be withdrawn without taking out a top up loan, can he take that out of the IP loan and claim a tax deduction on all the interest? That loan now becomes $330k and then the top up loan adds a seperate $30k.
Sorry if this is a dumb question or if it doesnt make sense, but hope someone can clarify for me. Any advice is appreciated as we want to maximise our tax deductions obviously but without getting in trouble with the ATO.
Thanks
I'm new to property investing so this may seem like a silly question to most of you, but I just want to check.
My partner and I have just bought our first PPOR together. We each have an IP in our names plus last year we bought an IP in joint names.
To put together our 20% deposit on the PPOR we used cash together with a withdrawal from my partner's IP (this used to be his PPOR and was making extra repayments each month to pay down the loan and had around $60k extra he could access without taking out a new loan/refinancing) plus he also got a "top-up" loan for $30k to tap into the equity in his IP, so now the IP has two loans against it. His unit was valued at $410k and the loan before we took out the $90k was $240k.
As far as I understand it, and please correct me if I am wrong, is that the interest on the $30k top up loan from the equity in the IP is definitely not tax deductible as this did not go towards purchasing an income producing asset. What about the $60k in extra repayments he had made over the past 5 years to pay down the principal on the original loan when it was his PPOR, as this was able to be withdrawn without taking out a top up loan, can he take that out of the IP loan and claim a tax deduction on all the interest? That loan now becomes $330k and then the top up loan adds a seperate $30k.
Sorry if this is a dumb question or if it doesnt make sense, but hope someone can clarify for me. Any advice is appreciated as we want to maximise our tax deductions obviously but without getting in trouble with the ATO.
Thanks