Redrawing on investment to buy PPOR

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

Join Australia's most dynamic and respected property investment community
Tags:
  1. Shanny

    Shanny Member

    Joined:
    22nd Jul, 2019
    Posts:
    17
    Location:
    Sydney
    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.
     
    Shanny, 8th Apr, 2020
    #1
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,923
    Location:
    Australia wide
    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.
     
    Terry_w, 8th Apr, 2020
    #2
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,629
    Location:
    Gold Coast (Australia Wide)
    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
     
    Rolf Latham, 8th Apr, 2020
    #3
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,504
    Location:
    Sydney
    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.
     
    Paul@PAS, 8th Apr, 2020
    #4
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,504
    Location:
    Sydney
    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
     
    Paul@PAS, 8th Apr, 2020
    #5