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Shifting debt from one property to another


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#1 pklb+1

Posted 19 February 2013 - 04:02 PM

Does anyone know much about shifting debt?



ie Home worth 750K loan 337K
Investment worth 550K loan 487K



Moving debt from the investment to the home as our home will yeild a much higher rent and we will move to the investment as we currently have to pay so much extra towards that mortgage.



So if I have worked it out right the current home could go to 600k loan and reduce the investment to 315K????



Look forward to any advise.

#2 Mishu

Posted 19 February 2013 - 04:25 PM

I'm not an expert, complete opposite in fact lol, but even if you are able to move the debt to your primary residence and move into the investment property, I don't believe you will be able to claim negative gearing on the new (higher) debt level. From my understanding, you will only be able to claim any negative gearing tax benefits based on the current (ie lower) level of debt against your house.

#3 JECJEC

Posted 19 February 2013 - 04:31 PM

Not sure what you are asking.

Remember as per the above It is what you spent the money buying NOT the security that the borrowings are on.




#4 JRA

Posted 19 February 2013 - 07:09 PM

QUOTE (Mishu @ 19/02/2013, 04:25 PM) <{POST_SNAPBACK}>
I'm not an expert, complete opposite in fact lol, but even if you are able to move the debt to your primary residence and move into the investment property, I don't believe you will be able to claim negative gearing on the new (higher) debt level. From my understanding, you will only be able to claim any negative gearing tax benefits based on the current (ie lower) level of debt against your house.

That is my understanding as well. Your accountant may be less risk adverse then mine though

#5 sam_k

Posted 20 February 2013 - 01:49 PM

From an accountant - you can do this, but you would not get a tax deduction for any more than the amount the loan currently sits at.  There are alternatives you can consider such as transfering the property from one of you to the other to maximise interest claims, but you would need the advice of a very good accountant to ensure that this would work for you.




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