PPOR paid off buy IP

PPOR market value 500k, IO loan 300K, Offset 300k, no interest paid

Can borrow up to 800k

Planing to buy 750k first IP. Move to parents house. Turn PPOR to the second IP.

Should I pay off the PPOR and apply for LOC? And future income goes to one of the two IP offset and a new saving account?

Thanks

 

You only need 20% deposit for the IP. that would be around $150k or say $170k with costs. You could get about $100k by a new loan on the PPOR, but any more would result in LMI.

So you need about 70k extra.

You now have 2 choices
a) pay down the current PPOR by $70k first and then split and reborrow, or
b) use $70k cash from the offset.

Both will result in the same deductibility in the short term. but if there are different owners then different things to consider.

However longer term if you are planning on moving into one property then it would probably be better to have the loan on this reduced by the $70k

Seek specific tax advice.

 

Thanks Terry. What about stamp duty and other legal cost? they are not included in the 70k right?

 

I assumed $20k for those in the above - you will have to do your own estimates based on where you will be purchasing.