Hi all
Please be gentle with me as this is my 1st Posting and I'm shortly to take the plunge into the IP world!
I understand how a LOC works, however having read various threads in the forum there is a popular notion that in order not to
Cross Colateral you draw down on your PPOR LOC to raise the 20% deposit to secure your IP.
However as you are pumping in Rental Income, taking out expenses and paying out Interest on your IP from your LOC does it not become complicated and messy to calculate how much interest you can advise the tax department is proportioned to your IP (and prove it to them if the case may be).
Further more will the taxation office disallow such interest to be counted as part of the IP interest as the original purpose / drawing of the loan can not conclusively said to have been for the purchase of an IP. People have LOC for things such as hoilday, cars etc.
Dont get me wrong - I see why you would avoid X- coll but I'm concerned about the above.
Regards & Thanks
Please be gentle with me as this is my 1st Posting and I'm shortly to take the plunge into the IP world!
I understand how a LOC works, however having read various threads in the forum there is a popular notion that in order not to
Cross Colateral you draw down on your PPOR LOC to raise the 20% deposit to secure your IP.
However as you are pumping in Rental Income, taking out expenses and paying out Interest on your IP from your LOC does it not become complicated and messy to calculate how much interest you can advise the tax department is proportioned to your IP (and prove it to them if the case may be).
Further more will the taxation office disallow such interest to be counted as part of the IP interest as the original purpose / drawing of the loan can not conclusively said to have been for the purchase of an IP. People have LOC for things such as hoilday, cars etc.
Dont get me wrong - I see why you would avoid X- coll but I'm concerned about the above.
Regards & Thanks