I wanted to buy a new home to live in and then used my existing home(currently living in) as Investment property. The problem is, it has already paid off. Can I borrow against old home to by new home and then claim/offset the interest on the old home with my income? straight answer is No, but is there any way I can write-off the interest on old home to my income if I borrow money to buy new home to live in? Else I will be paying the tax on the rental income of my old home.
Converting fully paid home to an investment property
Ldb318 on 08/02/2014 - 23:16
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Property tax accountant… not financial advisor
Im afraid i dont hv any info to add but i Would love to hear more on this too
Listen to the above posters, talk to an accountant.
The best thing to do would be to sell the house that is paid off, use the proceeds to buy the house you intend to live in, then borrow money to purchase an investment property (using the equity in your new home if necessary).
The downside of this is that it will cost you to buy and sell but the upside is you get to research your investment property.
You may be able to sell and buy back the house you are currently living in (e.g from your spouse).
Every property investor should talk to an accountant with property investment experience before you purchase, there are things they will get you to do that will save you heaps e.g. How to structure your bank accounts, records to keep, depreciation (http://www.bmtqs.com.au) etc.
Also get a good property manager and some landlord insurance.
It may sound daunting but with the right advice it is quite easy and now is a great time to invest with low interest rates and rising values.Too many ways to skin a cat. Get a LOC with your existing PPOR as security and what happens next is entirely up to you. You could buy another house with the money pulled from that LOC or if your income and projected rental income allows, leverage it by using some of the LOC as deposit for the IP and a separate mortgage for the IP's. Oh of course being a landlord, you're the scum of the earth and a driver behind the unrealistic and unsustainable rises in real estate.
Some banks might even suggest to cross collaterialise everything…Google's your friend, there's a shitload of info out there. There's even specialised forums dealing with these sorts of things.
I'm curious as well.
I would also be worried about capital gains on your old house.
I would sell the old.
Keep it Simple.
To be honest.. I wouldn't be asking accounting advice in this website. You need a tax accountant specialised in property (not just no-frill tax accountant). It does cost money, but will worth it in long term including how to structure the property/loan/finance etc. I myself paid A$ 1900 this year and it is worth the money (He helped me to claim back the past 2 years tax return that have been done very badly by my previous accountant).
Good accountant is paramount for successful investing!
You forgot this is OzB, people wants to save money.
there is a difference between getting a bargain and getting something cheap though…
I suck at being sarcastic.
I have questions to people advising to talk to a specialist accountant:
1. How do you find out which one is a reasonably good one? Words of mouth? I do not think you can find some reviews on the internet.
2. Wouldn't you be charged a fee even for the very first consultation? If it turned out that the accountant can do nothing given your current situation, then you will lose money for nothing??There are firms that are accredited with the professional accounting bodies such as CA and CPA, you should be looking at that. Look up a firm and ask about consulting, property investment and tax aint rocket science, property development on the other hand…
Talk to a financial planner. Mine was much more use than an accountant, but both were even better when they worked together w' the odd phone call to do the best thing. OK, I know, you need to get a good one before the current govt waters down the controls on the financial advers system favouring the big banks and vertical selling. Get a fee for service person.
please talk to a financial advisor