Redrawing on Paid off Home

Lcraigmate on 31/08/2014 - 13:26

HI All

Me and my wife our late 30's, both earn over $75,000 each..
I have my home from before I was married full paid off in Cheltenham (VIC), as well as a rental property in St Kilda East.
We also have over 500K in savings thanks to an inheritance

We are looking at Buying a house together from around $700-800K

Currently the mortgage on my Primary Residence is 100% offset, so whilst I haven't settled the loan or got the house deed. I pay $0 repayments each month

My main question is can I take the money our of my currently Primary Residence, and start renting it out, whilst using it to pay down any mortgage if get on a new home

I once had somebody say, that there are tax implications, since the ATO will say I have paid off my house, but I know that the Primary Residence is usually not assessed as part of Tax

Does anyone know if I can do it, or should I go to a financial Planner…
If I do want to talk to a financial Planner, can anyone recommend one (in Melbourne)

Cheers

Financial

closed Comments

  • adn on 31/08/2014 - 13:51

    go to somersoft.com Find a mortgage broker that post alot and is located in melbourne. Seek advice

  • saurab8 on 31/08/2014 - 15:00
    +1

    The tax implication will be on the investment property. The house that you have 100% offset is your Primary Residence – let’s call it House A.

    The new house that you are planning to buy – let’s call it House B.

    Once you buy House B and move in it - that will be your Primary Residence, while House A will become your investment property.

    If you take out the money from House A and pay the loan on House B - the interest you pay on House A, loan might not be tax deductable.

    So you might like to do something like - buying the House B with as much cash you got and get the smallest possible loan on it and then after settlement you move in House B.

    House A will have a big loan and the interest payment on that will be tax deductable.

    Best will be to talk to your accountant or call the ATO directly and ask for help. Hope this help.

    Mod: Removed signature

  • FiDad on 01/09/2014 - 12:38

    As long as money is sitting in offset account it won't be an issue. Read below article which will give you more insight-
    http://mortgageexpertsonline.com.au/_blog/Mortgage_Experts_B…

  • craigmate on 01/09/2014 - 22:42
    +1

    Thanks Lokesh7..
    That link does explain it a little. However I will still probably have to chat to somebody.
    The main reason it my Primary residence loan has probably been re-financed at least 2 time (Had house 12 years)

    My current load is interest only, Originally I was putting it into the account, but about 2 years ago, I transferred it to the offset.

    I am not sure if I will still have the tax implications mentioned in the article.

    Also will re-financing sort of been a fresh start…

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