Borrowing to knock down PPOR and build duplex and Rent one The goal with any investing should be to structure it in a way which maximises deductions while minimising non deductible debt. When building a duplex or 2 properties the aim to live in one and rent out the other ideally you would want to borrow for the investment portion and use cash for the owner occupied portion. This won’t be possible where you have one building contract and one land title as it is a big pool of costs. The result will usually be one big loan and a mixed purpose with apportioning of interest necessary. This is less than ideal as you will waste money in extra tax by paying down investment debt. If this happens to you the best way forward would be to split the loan at completion into 2 portions. The investment portion and the owner occupied portion. To do this you will need a valuer to work out the value of the land and building for each portion. You would then split the loan accordingly. An even better way to structure this would be to borrow the lot from the beginning. Even if you have half the project’s value in cash you should still borrow the lot. Then once the project is completed you can split the loans. The balance of each portion will be high. This doesn’t matter because you have a large sum of cash which you can then use to pay down or offset the owner occupied loan. This will maximise deductions and minimise non deductible debt. I’ve just saved you thousands of $$$$.