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'Refinancing' Question for PPOR to IP

Discussion in 'Real Estate' started by tc123, 8th Nov, 2013.

  1. tc123

    tc123 Tom

    Joined:
    4th Nov, 2011
    Posts:
    40
    Location:
    Australia
    Hi all,

    Let's say you are living in House 1 for the past 2 years which has an interest only loan with a 100% offset linked which you have been storing up your savings in.

    Say your original purchase price for House 1 was $100k and your loan is/was $80k.

    Now, if you are looking to buy a new property and keep Home 1 as an investment, can you refinance your existing loan so it increases to $90k and extract your money for the purchase of a new property?

    Note: Not to be confused with using equity - that isn't my question here.
    Obviously, if exceeding 80% LVR then LMI comes into place,etc.
     
    Last edited by a moderator: 8th Nov, 2013
  2. tc123

    tc123 Tom

    Joined:
    4th Nov, 2011
    Posts:
    40
    Location:
    Australia
    Just a further note, lets say in the 2 years you were in this property that you had spent $7.5k on capital improvements.. how/when does this come into any sort of tax consideration?

    And/Or can this $7.5k spent on capital improvemnts be worked into the 'refinancing' scanerio?

    Many thanks in advance :)
     
  3. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney

    Yes you can, subject to serviceability etc.

    Whether the interest on the extra $10k will be deductible or not will depend on what it is used for.
     
  4. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    seems you may want to repay yourself? This cannot be done because you cannot contract with yourself - this is known as mutuality.

    Any expenditure may come into account when working out CGT on the sale of the asset.