LVR when equity release on one property is used a deposit ?

Morning all,

Might not have had enough coffee yet, but curious about how to work out correct LVR on my two IP's when equity release on one property is used a deposit for a second;

IP 1 - Loan 1
- Loan 2 - removed equity as a deposit for Property 2 . Mortgaged on this property.

IP2 - Deposit was Equity Loan Above + additional Loan.

Confused as to which property would include the Equity Loan portion in the LVR calc?

Also, come tax time - would the interest for the equity loan used as deposit for property 2 be claimed against IP1 or 2?

Thanks guys

 

The equity loan uses IP1 as security, so it's included in IP1's LVR calc.
The purpose of the equity loan is to fund IP2, so you would claim deductions on interest based on the fact that IP2 is an income-producing asset.

 

@chylld thanks - appreciate it!

 

Think 'borrowed against' instead of 'removed equity'. The loan might be secured against property A but relate to property B and be deductible against the income of property B.

 

Is there a blended loan issue ? Hope its a distinct loan split for the equity

 

Inclined to believe that they are separate loans... would be different if OP said they "redrew equity"

Also "Mortgaged on this property" - no xcol by the sounds of it... again different if OP said "my bank helped me finance IP2 and gave me a good deal by having all loans through them"

 

Most definitely split loans Paul, Terrys Tax Tip 13 was probably my first read on this site.