Equity and tax...

We recently bought a new PPOR and kept our previous home as an IP. We are stuck in a fixed loan with the IP until September this year when we can refinance (not ideal!), so I am trying to get as prepared as I can before then. We have already decided to use a buyers agent because we are novices!

IP value $600k loan $250k
PPOR value $800k loan $550k

I have been listening to the property couch and reading (Barefoot Investor, PC and articles at Mypropertyco) and I am just wanting to confirm I am understanding what I am reading before I go to my mortgage broker.

I *think* this is what we maybe able to do...
Withdraw equity from IP up to 80% value of property e.g. $480k. Then as long as we use this money to fund our next IP's or to purchase shares, the amount of that loan will still be tax deductible? Is that right?

Also I am hoping to purchase a commercial space to lease out until I start my own business in 1-2 years, will this also allow the loan to remain tax deductible?

We also want to renovate our PPOR however I am thinking that the best option is to just get another loan completely separate from anything to do with the IP's?

Is there a better strategy?

Would love some advice

 

If you borrow to invest (in income producing assets ) you can deduct the interest. This is best done with a separate loan split.

If a property is used for business purposes the interest on the loan used to acquire the property will be deductible generally.

If you want to borrow to renovate make sure it is a separate split.

 

Yes

 

Yes

 

Good idea

 

Maybe. A lot depends of your families long term hopes and your families current financial position.

 

Thank you @Terry_w and @Ross Forrester its good to know the research is paying off I cannot believe how addictive this is!