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Equity in IP to pay off PPOR

Discussion in 'Real Estate' started by dve009, 9th May, 2010.

  1. dve009

    dve009 New Member

    9th May, 2010
    Melbourne, VIC
    Hi everyone! First time poster...only started reading these forums a few days ago..

    Just a quick question if anyone can offer some advice.

    Is it possible to use the equity on an investment property to pay off the loan on a principle place of residence? Will the increase of interest repayments on the IP allow for further tax reductions? Does the ATO allow for this?

    Any advice would be greatly appreciated!

  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    9th Jun, 2005
    Sydney, Australia
    Hi Deevs, welcome to InvestEd!

    You can generally use your equity for whatever you like, however, it is the purpose of this borrowed money (not the source) which determines the tax deductibility of the interest on that additional borrowing.

    So no, you won't get any additional tax deductions if you do this - so there's no point. Sorry.

    Do some research into "debt recycling" - there are some other strategies you can use to try and minimise PPOR debt while maximising IP debt.