Just realized that my loan is mixed purpose

Hi Guys, before i go into the crux of the matter, i just have to bless the day that i stumbled on this forum, its been such a huge source of enlightenment for me in the last few weeks. Thanks to each and everyone of you that take time out to answer rookies like me. Now to the real deal, i have seen some threads on mixed purpose loans etc and it quickly dawned on me that i am already caught out in this regards.

I read Terry_w's "Tax Tip 3: Mixing Loans - Don’t do it " but i definitely read it a couple of months late cos i already did it not knowing there was any implication !

The question is that how do you unmix a mixed loan. I will give a high level picture of the scenario at hand below. I have a PPOR which i have refinanced its loan to another bank in the past and taken the equity to buy a piece of land as well as pay off our car loans.

Now we are considering to turn the PPOR to an investment property, how do we correct the mixing of loans so that we can get full deduct-ability of interest or this cannot be undone ?

Secondly, when you are converting your PPOR to an investment property, do i have to inform the lender that it is going to change from PPOR to IP ?

 

Depends on what the loan documents say. (Generally speaking, yes).

Just like telling your insurer that the place is empty or advising the strata manager who your agent and tenants are.

 

I have written a separate tax tip on how to unmix a mixed loan

 

Thanks @Terry_w and @Scott No Mates. I will go and dig the relevant tax tip out. If need be, i will be back with questions for you Terry.

 

Have a chat with your accountant - work out what portion is deductible and what isn't.

Split loan accordingly.

Cheers

Jamie