Is it too late to split loan for investment property?

Discussion in 'Accounting & Tax' started by Panda1, 15th Jan, 2020.

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  1. Panda1

    Panda1 New Member

    Joined:
    15th Jan, 2020
    Posts:
    4
    Location:
    Sydney
    Hi all

    Have been reading the forum for a while but this is my first post.

    We have purchased an investment property for $445k and just finished cooling off, we've paid 5% of the 20% deposit, which was around $20k.

    Our current situation:
    Principal residence mortgage $700k
    Refinance of principal residence (pending) $50K - to finance part of the deposit/stamp duty
    Investment loan (pending) $356k

    Problem: We are paying the remainder of the 20% deposit/stamp duty from our existing principal residence mortgage. Total paid from our principal residence mortgage is around $58k.

    Should we have set this up differently for tax purposes and split the $58k from our principal residence mortgage? We've already paid $20k so is it too late to split that? Should we split the remaining $38k prior to settlement of just leave it as is? I think it will mean we have a "mixed use" mortgage and some interest will still be tax deductible, but it's just not as clean?

    Keen to hear your thoughts :)

    Thanks in advance
     
  2. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    14,474
    Location:
    Sydney
    Yes. Yes but can be refinanced. Yes.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

    Joined:
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    Australia wide
    How did you pay the $20k?
    If you used borrowed money from the main residence loan this can be split after settlement.
    Not really an issue if you split quickly.
     
    Lindsay_W likes this.
  4. Panda1

    Panda1 New Member

    Joined:
    15th Jan, 2020
    Posts:
    4
    Location:
    Sydney
    I paid it from our mortgage account, not the offset (we have extra money in both accounts).

    I can't split the loan now as we have an increase in progress, so we have to wait anyway.

    If i can split it after settlement this would be perfect, and I could split the exact amount that we paid for deposit, stamp duty etc so that it's clear what the funds are for.