scenario for IP

Discussion in 'Loans & Mortgage Brokers' started by pippen, 17th Apr, 2018.

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

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

    Joined:
    18th Jun, 2015
    Posts:
    41,675
    Location:
    Australia wide
    I think people are conflating loans and mortgages. They are 2 different things.

    If property 2 is not mortgaged then there is no cross collateralising of securities, but this is largely irrelevant as property 1 is the one being sold.

    Pippen what is the value of ip2 and what is the value of the loan? -
     
  2. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    Yep I just got lost reading these replies! Value of ip2 is around 280k value of loan is around 220k with 50k in offset.
     
  3. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,675
    Location:
    Australia wide
    Then it is simple.

    Substitute the security for the loan from a mortgage on IP1 to a mortgage on IP2.

    Current loan is $220k so it is under 80% LVR ($280k x 80% = $224k).

    There is no need to pay off the loan or reduce it. The sale proceeds from the sale of IP1 can be stored in the offset account and later used for the purchase of the new main residence and the interest is likely to be tax deductible - if I have read this thread correctly, seek specific tax advice to confirm.

    We can't get an answer as to whether IP2 is currently mortgaged, but it is irrelevant anyway. If it is there would be an additional discharge fee.
     
    pippen likes this.
  4. pippen

    pippen Well-Known Member

    Joined:
    10th Aug, 2016
    Posts:
    1,428
    Location:
    australia
    I will show the chap at work tomorrow these comments and hopefully he can figure it out with the bank! Thanks yet again to all contributors to this thread!
     

Property Investors! Ready to Pay Less Tax? Estimate how much Property Depreciation you can claim on your Investment Property. Washington Brown's calculator is the first calculator to draw on real properties to determine an accurate estimate.