IP Equity and costs - reducing non-deductible debt - ideas?

Hello

I'm seeking ideas (not advice) re: next steps in my investment journey (currently a very short journey). I don't have a 'strategy' but am learning through reading/listening and at the moment, just want to take some steps to help (... pay off PPOR loans.... invest further in property/shares.... unsure as yet).

I have a PPOR at approx 85% LVR (65% 'apparent' LVR when considering offset account funds). VBA loans are a small P&I with balance IO. Was originally 80% LVR but in a falling market.

I have an IP in another state that's at approx. 69% LVR ($140k in equity that could be released to come up to 80% LVR). Purchased a few years ago in a rising market (at 80% LVR), but negatively geared (good land, old house, soft rental market) and no sign of a change there. Loan is IO with same lender.

Within the next 5 years, the IP is likely to become PPOR and visa versa. Hence have not been paying down either loan, rather, saving into offset to be able to move the $ and reduce non-deductible debt at the time.

1. IP Repairs
IP needs some work done - probably $15k worth. I was originally going to pay cash - but wondering whether it's possible/better for tax purposes to get an additional loan against the IP to do the repairs, keeping the cash against my non-deductible debt PPOR loans? Will CBA do that type of lending?

2. IP Costs
Given that my equity is in the IP, not the PPOR, should I seek an additional loan against the IP to pay other IP costs (utilities, rates) - though I assume not interest? Again, minimising non-deductible debt.

3. Utilising equity in IP
I understand it's not debt recycling exactly because I'm not paying down PPOR debt to reborrow and invest, but what considerations should I have in borrowing the remaining equity against the IP and investing, e.g. in a LIC? Dividends could still contribute to paying down PPOR debt.


Thanks in advance for any ideas you may have!

 

1. Until it becomes the main residence you might as well keep cash in the offset account saving non-deductible interest.

2. Seek your own tax advice, but this might save you some tax

3. You could borrow and divert income into the offset account and then debt recycle once you move into the IP

Seek you own tax advice