We are thinking of downsizing from our family home into our investment property. We own our current house and have a mortgage on the investment. Plan is to rent out our family home. Question is can we use the equity in our family home to pay out the investment loan, as the family home would now be an investment? Also tax and CGT implications associated with same?
Hi @nikaust
If your family home becomes your rental, you can claim the interest on the remaining loan amount before you take out equity. Redrawing or refinancing is looked at as new borrowings. If the new borrowings aren't used to produce income, then you won't be able to claim the interest. Have a look at the example about Zac and Lucy in the info about interest expenses for rental properties.
For CGT, when you sell each property, the periods when they were rented out will be subject to CGT. You may be able to apply the main residence exemption for when it was your home. You would need to meet the eligibility criteria. Further more you may qualify for the CGT discount. These will reduce the CGT payable if any.
Hi @nikaust
If your family home becomes your rental, you can claim the interest on the remaining loan amount before you take out equity. Redrawing or refinancing is looked at as new borrowings. If the new borrowings aren't used to produce income, then you won't be able to claim the interest. Have a look at the example about Zac and Lucy in the info about interest expenses for rental properties.
For CGT, when you sell each property, the periods when they were rented out will be subject to CGT. You may be able to apply the main residence exemption for when it was your home. You would need to meet the eligibility criteria. Further more you may qualify for the CGT discount. These will reduce the CGT payable if any.
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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