Tax effectiveness when converting PPOR to IP

Hello!

Within the next 6 months we are aiming to move out of our PPOR and convert it to a IP#2. I've begun reading up and have some questions about making the ex PPOR loan tax effective and not tying up excess equity in this property.
Any advice on strategies on loan re-structure would be really appreciated!
IP 1 and the PPOR loans are crossed with 50/50 ownership.
A big goal of the next restructure is to seperate the properties and make them both as tax effective as possible (paying heaps of income tax currently on salary wages).

Borrower 1- 90 000 PA salary
Borrower 2 63 000 PA salary.

IP #1 market value 375 000, loan 360 000 - rent $370/week.
PPOR market value 500 000, loan 320 000.

Thanks heaps in advance for any help.

 

You will have to keep let's at 80% so get a new loan split secured against the ppor and then pay Down the loan on ip1 to 80%

 

Thanks heaps.

So do you recommend doing the loan restructure on the existing properties before dumping tenants in the current PPOR?
We should have about 35k cash deposit by March so we're tossing up if an entirely seperate loan would work for the new PPOR? ...Maybe pushing our luck and getting a 90% loan for the new PPOR?

 

There is no difference whether you restructure the loans now or when the tenants move in, except perhaps if LMI is being charged - which it shouldn't be.

For the new one you would want to try to avoid LMI, especially if an owner occup.

Seek specific tax advice before implementing - from a lawyer or tax agent, not a broker.

 

Great advice. I find brokers are not that in the know with structure for tax effectiveness. Any recommended Tax agents in Brisbane? Mines in Sydney... need a new one

 

No need for a face to face - epescially for something like this. Try Paul, Ross or Michael from the forums.

 

Because both will be IP's, both loans will be deductible as long as you haven't used either loan as a bank account and drawn in and out for personal use. If you have, it'll be a lot more complex.

Depending what the loans currently look like it could be very easy or it all could be very complicated.

Brokers are able to advise on the structure and many here are well versed in how to structure for tax effectiveness. It may be so straightforward that no tax advice is necessary - you can't increase the PPOR-turned-IP loan to increase deductions, it doesn't work that way.

 

Why are you giving tax advice?

 

Just to get a rise out of you