Restructuring existing IP loans and new PPOR

Discussion in 'Loans & Mortgage Brokers' started by Hugo Hung, 13th Nov, 2016.

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  1. Hugo Hung

    Hugo Hung New Member

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    Hi all, long time lurker first time poster

    My wife and I currently have two investment properties, both of which are positively geared, and have some equity in them. We are intending to purchase another home as our PPOR, and want to determine the best way to structure our portfolio.

    Current set up:
    Investment Property 1, Loan 1, offset 1
    Investment Property 2, Loan 2, offset 2

    Both loans are with NAB, and I'm looking at refinancing everything to ANZ

    In the new set up, I plan to have the same structure for the investment properties. For the PPOR, it will be:
    PPOR Property 3, Loan 3, offset 3

    My question is, can I take the equity out of both IPs and put into the PPOR offset? Is there something about using the equity for a non investment purpose and is not tax deductible?

    In addition, because I work for ANZ, i can borrow 90% and have LMI waived. I don't know what the best way to use this would be - borrow 90% on both IPs and more into the PPOR offset?

    Thank you in advance
     
    Hugo Hung, 13th Nov, 2016
    #1
  2. Marg4000

    Marg4000 Well-Known Member

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    You need to have a chat with an accountant before you do anything.

    But simply, unless borrowing is for investment purposes, the interest will NOT be tax deductible.
    Marg
     
    Marg4000, 13th Nov, 2016
    #2
  3. Hugo Hung

    Hugo Hung New Member

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    Thanks Marg, I have contacted an accountant, but they haven't got back to me yet. I will certainly wait for professional advice from them.

    I was hoping someone had been in a similar situation and be able to share their experience.

    Thanks for your response
     
    Hugo Hung, 13th Nov, 2016
    #3
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Im not acn accountant, but id say NO.

    The purpose test will apply here, rather than the security for the loans.

    id still look hard at a 90 % lend if you are good with money and sit with a financial planner that can use a structured debt recycling strategy to kill the new PPOR debt legally. Be wary though, most FPs have no clue.

    ta
    rolf
     
    Rolf Latham, 13th Nov, 2016
    #4
  5. Terry_w

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

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    I think you are asking can you borrow money against the investment and deposit this money in the offset on the new main residence? The answer is yes.

    But can you claim the interest = the answer is no.

    The interest on these borrowings would be a private expense.


    But you can move the cash from the offset accounts on the investment properties to the new offset on the new main residence and save non-deducitble interest.

    See
    Strategy: 11 Strategies for when you move out of the PPOR and keep it https://propertychat.com.au/communi...n-you-move-out-of-the-ppor-and-keep-it.11311/
     
    Terry_w, 13th Nov, 2016
    #5