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For people who own multiple properties, it’s not uncommon to see P&I home loans, and Interest Only investment loans, resulting in a tax efficient loan structure.
But how should you think about financing homes which might initially be for owner occupation, but then in the future become investment properties..?
A lot of people don’t realise that once you pay down a loan – which you do naturally with P&I repayments, and perhaps even more so with the use of an offset account – you can’t increase that loan back up again in the future to get higher interest deductions.
You can of course apply for new lending, however the deductibility for that new lending would be dictated by the use of that new money, regardless of the property the new money is being secured by.
Clients are of course encouraged to speak to their accountants about what is and isn’t tax-deductible, but the key point is that it pays to consider the longer term strategy associated with a property, and then structuring your lending accordingly.
Enjoy the show!
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The Long Property Show provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Nothing in the Long Property Show constitutes legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
