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Selling PPOR & IP Re-Finance

Discussion in 'Property Finance' started by dmb1978, 1st Dec, 2015.

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  1. dmb1978

    dmb1978 Well-Known Member

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    Looking for some advice. I have a PPOR that I have used the equity to purchase 2 IP's. I understand that if I sell this PPOR I have to pay down the 2 loans which then reduces the amount of deductible debt.

    If I then purchase a new PPOR I will have less cash and need to use the equity that I have just created meaning more non-deductible debt.

    Is this correct or can refinancing at the time of new purchase be done as to move more of the debt back onto the IP'S.

    To complicate it further if this new PPOR was not actually required for three years would it be better to buy another IP and then buy PPOR when needed, buy it and rent out or park the leftover money elsewhere until ready to purchase PPOR?
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    If you sell the PPOR, it's possible to secure the IP splits with cash temporarily until a new security is purchased to replace it.

    It's not a great long term strategy as the interest on the term deposits is taxed and there is a spread between the loan and TD rates, but it's better than losing the deductions forever.

    Also, if there's equity in the IP's you can get a top-up on the IP loan and use the funds to pay down the loans secured by the PPOR. These loans will still be fully deductible.
     
  3. dmb1978

    dmb1978 Well-Known Member

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    Thanks Jess.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  5. dmb1978

    dmb1978 Well-Known Member

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    Location:
    ACT
    Thanks Terry, looks like the term deposit is the way to go as Jess also mentioned.