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Remortgaging an investment property and tax implications

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Jillian | 06 Mar 2014, 07:21 PM Agree 0
We have an investment property in London, if we remortgage it on an interest only loan then re-investment the money in a property in Australia, will the interest be tax deductable ?
Then, if we sell that investment property in Australia after a year do we just pay the difference between the capital gains from when we bought until we sold? What I am really asking is this a possible way of getting around selling the London property and avoiding a very large capital gains tax on it? If we re-invested the money from remortgaging it I think the capital gains tax would be alot on the Australian property. We have owned the London property for almost 20 years and there is a lot of equity in it.
  • Mark Coburn | 08 Mar 2014, 10:55 AM Agree 0
    Remortgaging will not effect the tax deductibility of your interest, so any property related expenses including your interest and any refinancing costs will be deductible. I am not really sure about the next part of your question, it maybe easier to call me for a better understanding.
    Mark Coburn
    m: 0405 243 547
    Property Investment Advisor & Investment Property Buyer's Agent
  • MikeF | 13 Mar 2014, 08:52 PM Agree 0

    If you re-mortgaged the UK property only the interest on the amount of funds being utilised to purchase the Australian investment property (including costs) would be deductible assuming your an Australian resident for tax purposes. Also, on capital gains (and again assuming your an Australian resident for tax purposes) you would pay only 50% capital gains tax if the property was in your own personal name and you had owned the Australian property for at least 1 year.

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