Equity structure on Owner Occupied property sell

I bought an owner occupied property in 2007 (Property A). I raised 400K as equity to buy two-investment Property B and C. Now as I am thinking to upgrade to bigger space, I have to sell Property A to buy Property D. I personally favour sell and buy to get more security.

Therefore, as I will sell first, the raised equity (400K) will be paid off and will be used later in purchase of property D.

So, can I still claim interest on 400K as part of negative gearing?

If no, I will appreciate advice or guidance how should I proceed on the basis of above scenario.

 

Do not use the sale proceeds of your home to pay down tax deductible debt and then borrow to purchase a private residence.

Use the sale proceeds of your old home and put the cash into an offset account for your new home.

Talk to a good broker to ensure the two investment properties are held without the loans being repaid. A simple transfer of security from one property to another will not affect the tax deductibility.

Try to get the loans sitting seperately from each other. If you cross collateralise everything you lose flexibility later on.

 

Use the sale proceeds of your old home and put the cash into an offset account for your new home.
I haven't purchased the new home so whatever I earn from Property A will pay off the loan for "the property" and "equity raised for investment property".
As there is no loan so I am not sure how can I use offset facility.

 

If their is no new loan for the next family home you should put the cash into a mortgage offset account on the investment properties. This will then allow you to take the cash out on the offset against the investment properties later on and use it to buy the new family home. Using the offset means that you have not paid down the debt on the investment properties so you do not lose the tax deductibility on them.

 

Thanks a lot. I understand now

 

You borrowed against property A to purchase property B and C. So make sure you substitution security or refinance this loan over to be secured by B and C (separately).

See my tax tip on this:
Tax Tip 74: Selling a property that secures other loans https://propertychat.com.au/communi...ing-a-property-that-secures-other-loans.5296/

 

Hopefully B & C have risen in value and A wont factor into it.