IP Expense account options

Discussion in 'Loans & Mortgage Brokers' started by San2018, 29th Oct, 2019.

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  1. San2018

    San2018 Well-Known Member

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    A year ago, I had refinanced my PPOR and created 10K split to cover Investment property expenses so that I can claim interest on the split. Things changed, and I am selling my PPOR at the moment, so all/ split loan account will be closed. I thought of refinancing my IP and move the split loan/ amount secure against IP, but there is not enough equity.

    What options I have available to move expense loan amount split to some other loan type (personal loan, peer to peer lending?) so that I can retain the expense debit so that I can claim interest on its long term.

    I might be able to release equity from IP in 3-6 months time or buy PPOR so that I can create a split. So looking for short term solution to move existing split(~10K) to some other loan type.
     
    Last edited: 29th Oct, 2019
  2. Lindsay_W

    Lindsay_W Well-Known Member

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    How much interest are you claiming on $10K??
     
  3. San2018

    San2018 Well-Known Member

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    I have used 5K so far at ~3.5 % interest rate. I know it's not huge but just stated so thinking to continue.
     
  4. Lindsay_W

    Lindsay_W Well-Known Member

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    For $175 a year, probably not worth it? Your repayments on a personal loan will be much higher, so will your interest but not enough to justify it IMO - seek some specific tax advice though.
     
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  5. San2018

    San2018 Well-Known Member

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    I thought so but in the long term, the accumulated expenses will go up, let's say 7K per annum, 35K over 5 years?
    The personal loan is not worth I think but how about P2P lending or borrowing from the spouse. If I borrow from the spouse, not sure how we track interest and paperwork.
     
  6. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Firstly only $5k may be eligible (the other $5k has never been used) but I ask this - Why pay interest to get a tax deduction?. A deduction benefit is around 30-40% of the value. Its regressive. You are paying money $175 pa. The tax benefit is under $70. . I say pay it out.

    If the loan was financed on a card the servicing issue is likely more a hidden cost based on min repayments servicing
     
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  7. San2018

    San2018 Well-Known Member

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    To make the debt deductable and invest those funds for a better returns than 4% or pay off PPOR debt.
     
  8. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I’d keep it simple and pay it off.

    Cheers

    Jamie
     
  9. San2018

    San2018 Well-Known Member

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    Yeah, thanks Jamie. I am leaning towards closing the account. it's not worth hassle I think.
     

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