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Should I sell my current PPOR or make it an investment property (options??)

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Chris J | 03 Oct 2013, 11:41 PM Agree 0
Hi there,

We have a property (WA) that we bought 5 years ago that we currently live in. We have built up some $400k of equity in it through overpaying and adding value to the redraw.

We are looking to move on up and already have the finance to buy a new property but I would like to unlock the equity in the current property and max the HL on this property and then rent it out and put the equity into our new house redraw.

Can we do this as this will allow us to be close to breaking even on the new IP or are we stuffed and will end up making a profit on the current property?

So in essence we would have our house near maxed on its valuation, renting out and our new house with a smaller mortgage and some equity in a redraw.

Any help will be appreciated, we did have an advice group to tap into but they disappeared.

Cheers

Chris J
  • Eos Property | 13 Oct 2013, 11:02 AM Agree 0
    Hi Chris,

    This is a question that often comes up - you cannot retain the existing property, refinance it to the max and then use these funds to buy a new home.

    The ATO will consider the purpose of the loan as the determiner of deductibility - in this case the funds were borrowed to buy a new home. The security providing the loan is of no relevance.
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