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Loan Structure for Tax Purposes

Discussion in 'Property Finance' started by dmb1978, 15th May, 2016.

  1. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
    165
    Location:
    ACT
    Hello,

    I am sure this has been mentioned many times but my head hurts and I am struggling for time so looking for the quick answer.

    What is the best way to structure an IP loan that will eventually be your PPOR when you have no current PPOR for the time it will be rented.

    I am thinking I/O with an 100% offset but i still want to claim all the interest so is it better to have P&I with offset or does it not matter as it only offsets the interest. This will be our largest IP loan as the others will be most likely positively geared.

    Thanks
     
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Location:
    Canberra and Sydney
    Io with an offset - unless your hopeless with money - than P&I

    Cheers
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Location:
    Sydney
    Quick answers often don't mix well with the word 'best'.

    You are making a huge decision so take the time to figure it out.
    If you have contracted to purchase (which is the first mistake!) then borrow 105% and get IO and you can work it out later.

    Here are 2 loan structures I wrote about:

    Terryw’s Ideal Loan Structure Terryw’s Ideal Loan Structure

    The ideal Loan Structure where the first property is an investment The ideal Loan Structure where the first property is an investment
     
  4. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
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    165
    Location:
    ACT
    Thanks Terry. We haven't bought anything yet, still looking. We wont have enough equity to borrow 105% but as it will be out future PPOR we will have to put cash in. Will have another good read of the links to see which situation fits us best.
     
    Terry_w likes this.
  5. dmb1978

    dmb1978 Well-Known Member

    Joined:
    5th Nov, 2015
    Posts:
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    Location:
    ACT
    Thanks Jamie