One equity split, two properties?

Hi all.

Looking into getting an equity split/top up for $130k to use as a deposit for another investment property worth around 500k.

I’m thinking now I’ll buy two cheaper properties up to 500k value.

Is it still tax clean if I use the one split and use it for two sets of borrowing costs ? (Deposit, stamps etc) or do I have to do two separate splits of 65k?

I would prefer to have the one split for the two investment properties because they might not both be 250k, perhaps a 300k and a 200k property. It might not be an effective use of the equity splits if property values aren’t the same.

Thx

 

I recommend each property has a dedicated split.

It makes it easier later on to track and if you sell or refinance.

And an investment property can become private.

So a dedicated split for each property. You do not need a split for stamp duty and then a split for other costs - just one per property.

 

Yes it is ok, but preferably split it per property. If you don't split you will need to apportion the interest which should be pretty easy.

What you could do is buy the first property, then later split it, once you have worked out how much was used.

 

Does same go for paying money back, selling/refinancing. Can you just nominate which investment that repayment belonged to, or best to split beforehand?

 

Only on the sale of a property. The proceeds can be paid to that notional portion.

The ATO says a mixed loan can be split later.
A PBR was positive for someone split out one portion of the loan and keeping the original loan as is with a lower amount.

 

We're on the same boat, best advice is speak to your broker!

I too used my equity to pay for the deposits and buying costs (stamp duty, conveyancing etc).for two investment properties this is tax deductible as the monies borrowed are used for investing.

Only issue you will have is apportioning the amounts come tax time or let your accountant sort it out. As long as you keep records of the amounts used and for which property.

 

This is actually a tax question - best to speak to a tax agent/lawyer and the broker.

 

For gods sake don't assume a broker will give correct legal advice.
I've corrected some problems that a broker was about to make in the past with my setup, upon which they replied telling me not to worry because it's rare that you will get audited.

 

Tax advice is actually legal advice.

 

What an appalling response. If they were sued due to the advice then they would certainly be worrying.