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Should I rent my PPOR, advice please

Discussion in 'Real Estate' started by kingswood, 14th Jun, 2011.

  1. kingswood

    kingswood New Member

    14th Jun, 2011
    Perth, WA
    I own my PPOR (worth around $420k) but it's too small for the growing family.

    I also have $155k in the bank.

    We have found a great house that's for sale for $350k that we both love, but in need of a few $$$ spent on it.

    We want to refinance the PPOR for $215k and stick a tenant in paying $400 a week (next door acheiving this) This rent will basically cover the mortgage and some.

    Then we'll use the $215 + $155k to buy the new house outright and use the tax advantages with our PPOR.

    Is this ok to do.
  2. Billv

    Billv Getting there

    15th Jul, 2007
    Sydney, NSW
    No this is not ok because the refinaced loan won't be tax deductible.
    Better to sell the PPOR or if you don't want to,
    at least sell your partner's half share to yourself for $420/2=$210K
    That way the $210K is a borrowed expense against your current PPOR and when you move out it becomes tax deductible.
    You'll pay stamp duty but it is the only legal way to make the loan tax deductible