making PPOR debt into good debt

Discussion in 'Accounting & Tax' started by Excalibur1, 17th Mar, 2017.

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  1. Excalibur1

    Excalibur1 Well-Known Member

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    Hi

    I have read about debt recycling and love the idea.

    Can loans be recycled between family members. For example, once i pay down my PPOR debt and split the loan, instead of investing in shares or more property. Can i loan the funds to lets say my parents, so that they don't pay the bank but they pay me the interest?

    This in turn would make my loan deductible and parents will still have to pay it, but instead of giving the money to the bank they would be giving it to me? What are the limitations on this? Can it be done between family members assuming all correct contract terms are done.

    I know... don't do business with family. Assuming all goes well with family members is this possible?

    Cheers
     
  2. Terry_w

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

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    Yes you can lend to family members. And this can be done as part of a debt recycling strategy.

    Get legal advice first as many issues
     
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  3. Excalibur1

    Excalibur1 Well-Known Member

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    Sydney
    Thanks @Terry_w . Wouldn't do anything without legal advice :)
     
  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Yes but what you are asking could well be a Part IVA issue. ie a tax avoidance scheme to obtain a tax benefit. Tax advice would be prudent as not all lawyers can provide personal tax advice
     
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