Ideas... not advice

[willoneau]

I do vaguely remember asking my accountant if i could refinance my investment load back up to original amount and use it to pay off some of my home , he said NO.

 

[willoneau]

But please explain how i can do it, i would love to pay my home loan off and claim the interest.

 

[kahuna1]

Not being rude,

Find another accountant and pay him.
Tax minimization is legal, and suggesting it is NOT is absurd.

I have given enough free stuff here, go pay someone .... to hear the same thing. Suggesting one cannot arrange your finances ... or are not allowed to, then actually insisting its not allowed ... was already absurd.

If your suggesting a margin loan on say shares as investments is NOT tax deductible ... same thing ...
A loan against any income producing asset and even an asset NOT producing income but designed to eventually produce income is a tax deduction. BUT NOT >.. home loan.

More money you pay better advice and structure you get

 

[willoneau]

Never mentioned tax minimization is illegal and misquoting me is being rude.

 

[willoneau]

I can only guess we might be arguing or discussing two different things and not on the same page.

 

[kahuna1]

I can only guess we might be arguing or discussing two different things and not on the same page.

I thought I was crystal clear. I am not arguing, merely outlaying a simple concept. The misconception of deduction of interest is a ONE step issue.

Over home ... NO .... Cap gains over home ... NO

... over investment property YES deductible;e ... Cap gains on investment property get hit with tax.

NO debate ... no fuzzy lines its ... I thought impossible not to comprehend or understand.

If I am being rude ? I would be blunter. Like telling someone strident and rude in their incorrect belief about tax deductions they were an imbecile. I don't believe I said that, nor implied it.

 

[willoneau]

Debt wise .... get the loans all on the investment property .... RUN it as a loss ... basically a 100% of equity loan and put the NEW NO debt on the home you live in up as security. Having an identical sized loan ... but having an extra 20k or so tax deduction will put 10k in your hand each year.

DIscussion probably started from here i suspect.
Good luck.

 

[kahuna1]

Not discussion ... an assumed basic knowledge ...

Loan on home .. NO tax deduction ...
Loan on investment, shares, investment property and so on ... tax deduction.
Tax at top end of marginal rate with medicare levy close to 50% ... so 20k int deductible equals 10 k tax and medicare levy saved in hand.

simple stuff .

 

[willoneau]

Not discussion ... an assumed basic knowledge ...

Loan on home .. NO tax deduction ...
Loan on investment, shares, investment property and so on ... tax deduction.
Tax at top end of marginal rate with medicare levy close to 50% ... so 20k int deductible equals 10 k tax and medicare levy saved in hand.

simple stuff .

your point? I love the word assumed it gets so many people into trouble.

get the loans all on the investment property, please explain simply how to achieve this without selling land or investment properties?

 

[kahuna1]

Gee ...
Go to the bloody bank and refinance.
The security is the same, ... please speak to a competent accountant, he will spoon feed it to you, so too will any decent mortgage broker.

What the hell are you talking about selling investment properties ? IT is NOT an issue. It in fact is a capital gains event. Again ... speak to someone who has the inclination to explain it.

Even google TAX deductions investment properties Australia and your visible knowledge will exponentially increase.

You do know what Google means ? OR am I assuming too much ? Maybe ask some 6 year old and they will share.

Good luck

 

[willoneau]

I have had enough of you assuming i'm stupid so F..off.

 

[willoneau]

Lindsayf , I apologize to you for getting off track from your questions

 

[willy1111]

Yes ... but the security for the loan .... MUST be the investment property .... it may be the bank needs more security such as the title of the home as the loan.


The LOAN is a NEW loan with the bank with the investment property FOR a new amount and primary security for the loan is the title over the investment property .... it may be they require secondary security like the title of your house as well ... but the loan is over the investment property.


And yes the loan will become deductible ... it already WAS ... that you have to refinance and make it bigger is irrelevant !!

My understanding is different.

What does s8.1 of the Income Tax Assessment Act 1997 say?

Essentially purpose of what the funds were used for will determine deductiblility it says nothing about what secures the loan.

 

[kahuna1]

I have had enough of you assuming i'm stupid so F..off.

Sadly I see you couldn't work out what google was.

Essentially purpose of what the funds were used for will determine deductiblility it says nothing about what secures the loan.

Yes ... the purpose is to REPAY the capital you have invested in the investment property. So if its worth 750k and you borrow now 750k but have 400k of equity, that being now repaid ... and an aside you use that capital to repay 400k off your home loan is an aside.

The securitization and what the bank will demand as security IS an issue and the primary mortgage MUST be still over the investment property., That they will likely still demand a security over the home as well ... appearing on the title is ... basically not much different than two separate loans.

But they .... are needed ... to change the structure and nature of the loan ... the loan, whilst maybe NIL movement if you have the loans between two banks, merely a 400 k debt against home loan now appears under the investment one, it is needed to satisfy the ATO.

That the free funds could be used for a trip to Vegas or whatever ... is really secondary. The purpose of the loan and NEW arrangement is to free capital ... CASH invested in the investment property.

Pretending the mortgage over your home has now been a loan over the investment property DOES not and will not satisfy the law. Arranging a new loan does. Intention and purpose I presume were changed for a long list of reasons, and I suspect divorce or assets being handed down may be something to do with it. An aside, easily remedied and likely with a lowering of the overall interest rate paid.

Shop around ... be hard nosed with it. Of course ask your accountant or tax advisor and he will confirm the same. To suggest one cannot switch funding for investments is, well, strange. Home loan is one thing but when o0ne goes beyond that, investments, properties, shares and so on, its a expense that can be deducted. Using NO capital gains on home is a good thing, not being able to deduct the loan interest is the payoff. Vica versa for investments ... whether they be art or shares or gold or investment properties or commercial ones ....

If that makes it any clearer..

Then again ... still laughing over Google issue.

 

[willoneau]

My grandmother doesn't know what google is hope you wouldn't laugh at her.

 

[willoneau]

Even ... as a suggestion ... have your investment properties ALWAYS for sale ... at idiotic prices or ones that make it very attractive. To avoid cap gains ... maybe sell your house and then move into an investment one and avoid it totally !!

Don't you pay capital gains on the difference between purchase price and valuation when you move in or are you saying not to sell the property at all after you move in?

 

[willy1111]

Don't you pay capital gains on the difference between purchase price and valuation when you move in or are you saying not to sell the property at all after you move in?

Assuming one has never generated income from their home it can be sold tax free....main residence exemption from CGT.

Move into investment property and never sell it = no CGT to pay as not sold. If it is sold down the track, their is a complex CGT calculation to perform which takes into account the proportion of time it was invesment and home where main residence exemption applies.

 

[willoneau]

Assuming one has never generated income from their home it can be sold tax free....main residence exemption from CGT.

Move into investment property and never sell it = no CGT to pay as not sold. If it is sold down the track, their is a complex CGT calculation to perform which takes into account the proportion of time it was invesment and home where main residence exemption applies.

but after complex calculation some GST would be paid?
Willy1111 I did actually know that, all except how to do the complex calculation, unless it wasnt' going to be sold in the future. But guess something would have to be paid after death but only an assumption.

 

[Sir Burr]

but after complex calculation some GST would be paid?

Yeah I might be up for a bit as we rented our place for about a year before moving in. Probably not a great idea but at the time wanted to get the mortgage down.

Rented for a year and owned for 20 years so I think it's basically 1/20 of capital gains - buying costs.

Not "that" complex

 

[willy1111]

but after complex calculation some GST would be paid?

I think you mean CGT.

but after complex calculation some GST would be paid?
Willy1111 I did actually know that, all except how to do the complex calculation, unless it wasnt' going to be sold in the future. But guess something would have to be paid after death but only an assumption.

If it produced income at any point, when sold yes there would be a cgt calc done...but they could free up money from sale of home tax free to use/invest through retirement until death...ie the cgt is delayed...whereas selling Investment property to free up money for retirement will incur CGT at sale which means CGT not delayed.