Using available IP equity to fund PPoR build ?

Hi Folks,

I need some guidance or comments on whether this can be done or illegal according to the tax ruling?

Using the subdivided block on my existing Investment Property (IP), I'd like to build my own home (Principal Place of Residence - PPoR), using some of the available equity on my current Investment loan:

The current loan balance in the bank is $695,700, as it was paid Principal & Interest on the Redraw facility.


This was calculated using: Equity Calculator - Consider an equity loan - NAB

My question is:

1. Can I use the $104k loan towards building my own PPoR ?
2. The existing account that is connected to the $695,700 loan, does the interest can still be tax-deductible?

Thank you in advance.

 

Which tax ruling? Generally tax rulings only rule on tax issues, not illegality.

Loans don't have equity. Equity is the value of the security less the loans secured against it.

You should should be, "Can I borrow $104k to help build my main residence?

The answer is potentially. You seem to have the equity, but you still have to be able to qualify to borrow it.

Does this loan relate solely to the block you are not living in? If you have subdivided it is likely that it relates to both blocks so the answer would be 'no' - part of the interest may be deductible though.

 

Think Terry has you covered there... hopefully that interest rate is a misprint!