Tax deductiblle loans

Many years ago, I redrawn fund from PPOR home loan to buy IP and claim tax deduction on interest. At that time, home loan was almost fully paid off, I opened a separate loan account secured by PPOR to purchase a IP.

Now I am selling PPOR before buying a new PPOR. Technically, I must fully pay existing home loan and lose the tax deduction.

Do you have any advice or better way to structure the loan without lose of tax deduction?
Thanks

 

I have written a tax tip on that

Tax Tip 74: Selling a property that secures other loans Tax Tip 74: Selling a property that secures other loans

 

If there's now enough equity in the IP, you could refinance the equity loan to the IP, using that as the secutiy moving forward. When you sell the PPOR you no longer have to pay out that equity loan.

 

Thanks Terry and Peter
I followed the strategy which Peter mentioned above. Credited to Terry in his example, too.

I have refinanced IPs and got IP equity in offset accounts. Should I use this fund to pay off the equity loans against my PPOR before the PPOR settlement date?

Take a closer look into my scenario

2015: open a equity loan 1 of $150k against PPoR to buy IP1
2018: open a equity loan 2 of $200k against PPoR to buy IP2
9/2021: Refinance IP1 and IP2 and cash out into offset accounts: $50K and $230k (with a new lender)
10/2021: Use $80K in offset accounts to reduce equity loan 1
10/2021: Use $200K in offset account to pay off equity loan 2
12/2021: settlement of PPOR
1/2022: Settlement of new PPOR

Can I claim tax deduction on two new IP loans?

 

No. Not directly. However if the refinancing of the old loans is evident it may substiture the old loan deductible for the new ie a REFINANCE. Not enough info.

 

So, I rent somewhere to live and convert the new purchase into an IP.

Later, when the loan of the new IP is paid off, I move in it. How is CG tax calculated on this house? Is it based on ratio of numbers of years I rent it out and I live in?

 

I think that 6 year CGT rule can be applied if I move in and stay for 6 months. Then, rent it out. Is it correct?

 

If you did things correctly then yes, but not enough info

 

this is a question unrelated to the loans question. It would be based on the number of days it was v wasn't the main residence.
Tax Tip 120: CGT and moving into an Investment Property https://propertychat.com.au/community/threads/tax-tip-120-cgt-and-moving-into-an-investment-property.10714/

 

it could be, but it will depend on the circumstances.

 

Hi Terry & Paul
Thanks for your reply.
What more information you need?

 

I don't need anything, but you need to go and get some tax advice.

 

Thanks Terry,
How do I engage your tax advice?

 

you would need to become a client of my company Loan Structuring Pty Ltd

 

Thanks Terry. I will contact you in PM to find out more your services.

 

I will use offset accounts to pay off accounts refinanced against IP (leave $1 in loan accounts to prevent them closed) then redraw from IP loan accounts to repay the equity loans against PPOR. Hope this works