Convert property to investment

Discussion in 'Accounting & Tax' started by shaun80, 16th Apr, 2020.

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  1. shaun80

    shaun80 New Member

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    Hi,

    I have one property and I lived there for 6+ years, I rented it out 6 months ago and I myself moved to a rental property. I never let the bank know that it is an investment property (no malicious intent) it never occurred to me.

    Should I let the bank know now? I understand that the rates for Investment property are more but will the bank ask for contract letter making and charge me for the 6 months?

    I have been told that I will still be able to make claims if any with the ATO as an investment property and without having the bank know the same. Is that true?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    tax law looks at the use to which borrowed funds are put to determine deductibility.
     
  3. shaun80

    shaun80 New Member

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    As in it will look of it is indeed investment loan?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    no

    If you borrowed to buy the property and that property is income producing it is irrelevant whether the lender has labelled it one way or another.
     
  5. shaun80

    shaun80 New Member

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    Ok great! So should I be converting it to investment loan? Is there is disadvantage to not changing it?

    Current circumstances any benefit if I convert it to investment loan? In terms of tenant unable to pay and for me to have deferral ?
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    You should read your loan contract and see if you have promised to notify the lender, and then consider the consequences of not doing so even required.
     
  7. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    The issue can pop up if your tenant stops paying rent and you call seeking relief. Etc...