How to keep deductible debt while selling an IP

Title meant to be "How to keep deductible debt while selling an IP" something weird happened when posting...


We have our own house (ppor) and 2 investment properties (IP 1 and IP2) and due to refinancing and using the money on different properties the loans are split between the properties and it's a bit messy.

We are selling IP1, it was refinanced at one stage and the excess of the loan (let's just say $100k) on that was used for IP2 purchase and we will continue holding that property.

IP2 was also refinanced at a higher loan amount and the excess (let's say $100k) used to finance renovations on our PPOR.

The aim is to keep as much of the loan deductible as possible.

If we sell IP1 and clear that full loan, the portion used to finance IP2 purchase is gone and no longer deductible.

Meanwhile IP2 has $100k of that loan which was allocated to PPOR Reno's that are not deductible.

Can we somehow reallocate this so that we clear the PPOR non deductible $100k and keep the deductible $100k debt on IP2?

Any help is appreciated.

If the answer is "get an accountant", is anyone keen to take this on? Thanks. Tim

 

This should cover it
Tax Tip 74: Selling a property that secures other loans Tax Tip 74: Selling a property that secures other loans

 

Thanks.

I think I'm a bit stuffed though.

I'm maxed out with my serviceability so I can't refinance IP2 in order to use the extra $100k to pay down the loan on IP1 before selling IP1.

That would have been a great idea if I had the serviceability...

And because I'm not making any new purchase I don't think any of the other options will be possible.

It's okay though. We aren't talking huge amounts of debt that will be non deductible for ages. Exact figures are $400 000 loan with 80k that won't be deductible. Should take me 8 years to pay off the remainder of the loan. My rough calculations tell me I'll be $12800 worse off total by not being able to make those deductions... Not great but could be worse.

 

Thanks!

 

Macquarie for IP2 that we are keeping. nab IP1 that we are selling. Boq for ppor.

 

substitution of security might be an option.

 

that makes it hard to substitute security unless you have heaps of equity.

 

We have a bit of equity. IP2 that we are keeping has 400k owing and worth a bit over a million. Ppor 450k owing worth 1.5mil. IP1 that we are selling is is worth a million and there is a 500k loan on it.

 

any redraw amounts available in the remaining loans?

 

Sorry for the late reply. Been flat out fixing up the house to sell.

No redraw the loan is fixed, on the IP we are keeping, untill next year.