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Refinancing without impacting negative gearing

Discussion in 'Accounting & Tax' started by e96anban, 31st Jul, 2016.

  1. e96anban

    e96anban Member

    Joined:
    24th Aug, 2015
    Posts:
    22
    Location:
    australia
    Hi gurus,

    I have a PPOR and IP
    PPOR
    - Split1 $300k
    - Split2 $120k limit with 98k in the loan (22k available for redraw in the loan). I used this split to pay the deposit if my IP and make redraws to pay the ongoing expenses of my IP

    IP
    - 300k

    I am looking to refinance the PPOR for a better rate however I would like to know how do i handle the 22k funds without impacting my Neg gearing.

    My thoughts:
    1) Move the 22k from PPOR Split2 directly into IP loan without mixing via an empty savings account. Any future IP expense is to be drawn from IP Loan. Would this work?

    2) Alternatively, refinance the PPOR with $300k and $120k split and then redeposit the $22k into Split2. Somehow I dont think this would work.

    Appreciate any of the gurus opinion here.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,942
    Location:
    Sydney
    What $22k in funds? You only have not borrowed this amount.

    1. dangerous

    2. mixed loan

    Don't do either

    Refinance the debts:
    1. $300,000
    2. $120,000

    and set up a 3rd split $22,000

    See
    Tax Tip 1: Parking borrowed money in an offset account Tax Tip 1: Parking borrowed money in an offset account
     
  3. e96anban

    e96anban Member

    Joined:
    24th Aug, 2015
    Posts:
    22
    Location:
    australia
    Thanks for your response Terry,

    Since I have 98k loan outstanding on the 2nd split, should i do the following?
    1) Split1 $300k
    2) Split2 $98k
    3) Split3 $22k
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,942
    Location:
    Sydney
    Yes

    Sorry I meant to say $98k and not $120 at point 2.