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Selling PPOR with equity loan

Discussion in 'Accounting & Tax' started by Pete Prescott, 14th Jan, 2016.

  1. Pete Prescott

    Pete Prescott New Member

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    Hi All,

    I have tried looking through the forum for an answer but can't seem to answer my question clearly.

    I have a PPOR with a seperate Equity Loan I used for the deposit to by Investment property 1.

    I am considering selling the PPOR which will mean the Equity Loan would need to be payed down from the proceeds of sale.

    Can I use released equity from my Investment loan 1 to pay off the Equity loan used for the deposit to maintain deductability?

    Thankyou.
    Peter
     
    Frosty123 likes this.
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    chylld likes this.
  3. See Change

    See Change Timing Lord Premium Member

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    We've had the same LOC for the last three PPOR's . We've just substituted the Security from one house to another .
    When we did that with the last sale , we had a short gap and put the money in a term loan as security so we didn't have to go through refinancing.

    If you have equity in the IP you can refinance and use that to pay down the Equity loan and it should still be deductable .

    Cliff
     
  4. Frosty123

    Frosty123 Well-Known Member

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    Does this apply when refinancing?
    Currently have a PPOR with equity released to pay the deposit on an IP (both with same lender, but not cross collateralized).
    If I decide to refinance my PPOR with a new lender in the future, would I be best to follow the same advise as this post?
     
  5. Pete Prescott

    Pete Prescott New Member

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    Great, thats what I was looking for!
    Thanks Terry and Cliff.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    When refinancing you can incorporate the equity loan into main loan against the property it was used to purchase, or you can just secure the equity loan against the PPOR with the new lender. Either way, if done correctly, you won't change deductibility of interest as all you are doing is changing security for the loan and this doesn't effect deductibility. see Tax Tip 22: Security for a loan does not determine Deductibility of Interest