Redrawing on investment to buy PPOR

Discussion in 'Accounting & Tax' started by Shanny, 8th Apr, 2020.

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  1. Shanny

    Shanny Member

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    Looking at redrawing on investment property to buy PPOR. I understand that there might be tax implications to use available redraw funds for non-investment purposes.

    If I refinance to the full amount, does that mean I can access the redraw balance without creating additional tax issues?

    * I will speak to my accountant as well. Just want to see if anyone else has done this.
     
  2. Terry_w

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

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    You should split the loan and continue to claim the interest on the portion associated with the purchase of the investment property. If you just redraw you will need to apportion the interest.

    Refinancing doesn't change the amount of the loan being deductible.
     
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    separate loan splits for each purpose.

    Keep in mind many lenders are not suitable for an Active Debt Recycle process which may help you pay off the PPOR debt a little more quickly

    ta
    rolf
     
  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Yep. The new borrowed $$$ is for a PPOR so non-deductible. The old part refinanced still deductible v IP. As Terry says best split and kept apart to avoid tarnishing each element.
     
  5. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Some lenders are pulling back from equity releases with a lower LVR at present. No better time for brokers to weave their witchcraft and knowledge in a dynamic and confused market at present