Hi, next year, we plan to move into our "Investment Property" (it was always intended to be our PPOR but we live interstate and its taken us a couple of years to get loose ends tidied up). There is the possibility that we may not be willing to sell our current PPOR next year if the local housing market cools down and we may need to convert it into an IP when we move. The problem is the loan arrangement. We have a $1.4M loan on the IP with about $1.1M in offset. Our PPOR is valued at about $900k and is fully paid off, but x-collateralised as additional security on the IP loan. Is there a recommended strategy to be tax efficient when we swap IP<->PPOR? It would be nice to be able to offset loan interest costs against rent after the property purposes are swapped over. There is a complication as the current IP is a rural property which required a Suncorp business loan which gets reviewed every 12 months.
Not a tax guy, but sounds like u will have 300 k nett loan left which will be non deductible. On sale of the existing PPOR, that will clear the balance of the debt. How rural is rural , ie how many acres pls ? ta rolf
Can you confirm where the rural property is ? How big is it ? Assuming there's a house on it ? Not used for commercial purposes ?
it's 250 acres about 10km from Toowoomba in Qld. It has a good quality house on it and it's leased as a residential property until March next year. Plan A is to sell our current PPOR to clear the debt, but if conditions arent favourable in 12 months time, we will consider keeping it as an IP for a while (Plan B).
Why was this done as a Business Loan with Suncrap? And cross secured too? I would be looking at restructuring it asap and uncrossing the current PPOR regardless
here are some strategies Strategy: 11 Strategies for when you move out of the PPOR and keep it Strategy: 11 Strategies for when you move out of the PPOR and keep it
I think Strategy 2 and 4 are worth investigating as the current PPOR is soley in my name. I shall make an appointment to see our mortgage broker. Will need to investigate stamp duty costs too. Thanks again.
