Is it possible to transfer the equity I have in an investment property to our home…. our home is worth around $600,000 and we owe $265,000. We have an investment property worth $450,000 and the loan is $250,000.
If we look to refinance can borrow up to 80% on the investment property to repay the home loan?
Timo. I'm guessing you are thinking about this on the basis that if you do as you ask, that you could increase the tax deduction for interest in respect to the investment property.
I recommend you speak to your accountant or tax advisor.
My understanding is that you can move the debt to the investment property, but the interest on that portion is not an allowable tax deduction.
Once again, you need to confirm this with your own advisor.
You will not be able to increase your tax deductions, as the change in borrowing would still be a private purpose.
If you main plan was to take the finance off your home as fast as possible, I'm sure the brokers could assist you with this. At $110k from your numbers above, this would not be enough to clear your home as security.
Sorry to be the conveyor of bad news.
Claiming a tax deduction on a loan is linked to the purpose of the funds, not what property the loan is secured against. As such, what you're looking to do probably won't work.
There is however a strategy called Debt Recycling which would allow you to achieve your desired result.
I've written an article about this which I think you would benefit from - https://www.multipartfinance.com.au/blog/what-is-debt-recycling-a-simple-strategy-that-produces-a-significant-outcome
Any questions, feel free to get in touch.
0400 530 868
As you've heard the answers from others, I won't reiterate the same sentiments.
However, there is a strategy you can employ if you have personal + investment debt. It's called Debt Recycling. This advanced strategy allows you to eliminate your 'bad debt' personal debt quicker whilst maximizing your tax deductibility on your investment property debt.
There are also such loans available, called 'Investor Combo's'. This is where an average Nett rate is set which produces a much lower rate on your personal debt 'Home Loan' and a higher investment property rate to cause the average rate.
Hope this helps...