How to maintain deductibility when selling & buying new PPOR

Hi everyone, this is getting a bit complicated for me.. I hope you can make sense of it and give me some suggestions.

I have previously paid off my PPOR and drawn on the equity to the tune of $228k for deposits on IPs.

I now want to sell my PPOR and upgrade myself to a better one. If I sell the PPOR though, I will have to repay these deductible loans and then borrow to buy the new PPOR, making it non deductible.
I'm trying to figure out how I can preserve these investment loans when I sell my current PPOR.

I've had one of my IPs revalued and I can increase it's LVR and refinance about $45k onto it, but that still leaves a bit over $180k that I need to find a way to preserve.

1. The best options would be to either arrange simultaneous settlement and switch securities, or to obtain bridging finance to buy a new PPOR then pay it off with the sale proceeds. The problem with both of those is that I haven't found a new one I like yet but I may have an offer on my current one already, so it's happening in the wrong order.

2. Another option I had thought of was having my parents write me a loan for $180k, so refinance to an unsecured loan from them. I haven't approached them yet though so they could say no. I believe they have enough liquid assets to be able to afford that but it might be a bit complicated.
How does the ATO look upon large loans to family? I assume my parents would pay tax on the interest I pay them. Would I still be able to claim a deduction as it is a refinance of my IP loan?
That arrangement would only be for a few months until I find, and pay cash for, a new PPOR. I could then draw on the equity to repay them and hopefully the loans would still be fully deductible after all of that.

3. But that sounded complicated, so I started thinking it might be cleaner if I was able to use my parents equity as security on my existing loans - so add them as guarantors to my current accounts, then discharge my PPOR mortgage, then when I found a new PPOR I could add it as a new security to the same loans and release their guarantee.
Does that sound possible?? (current lender is Adelaide Bank if it makes a difference)

4. Fourth option is to not buy a new PPOR at all. Simply rent a nice place and invest the rest of the cash. But in this case I'd still be tempted to try and refinance the $180k to a loan from my parents (see option 2 above) so still interested to know if that would work
I'm not adverse to renting, but one of the reasons I wanted to buy a new PPOR is to get the CGT exemption in a (hopefully) booming blue chip suburb.


Are there any other options I haven't considered?

Thanks
Kirsty

 

Buy the new PPOR first and the restructure the loans - if you service.

Other than that the related party loan is easiest, just get legal and tax advice. You can maintain deductibility this way.

 

You might be able to temporarily secure the IP loans with a term deposit until there is a new PPOR to secure it with. Not all banks are willing to do this but its worth asking.

 

Thanks Terry and Jess
I had a look at the cash secured loan but the interest rate makes it less attractive than a related party loan (until I sell my PPOR I don't have enough cash to secure the entire $180k anyway)
Hopefully the timing will work out right to be able to get bridging finance for my new PPOR and then restructure. I approached one lender and serviceability is a bit tight, but should be able to work something out

 

When you sell the property you let the bank take your cash and you keep the loan open.

 

You don't need the cash - once the house sells, the main loan will get paid out and the IP loans will be secured by a term deposit holding funds from the sale.