'Refinancing' Question for PPOR to IP

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.

 

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

 

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.

 

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.