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Tax matter relating to refinancing property

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Initiate

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Currently living in own property, seeing increase in value over the last many years. Plan to refinance and put forward the extra money to purchase a new home to live in, and turn existing home to investment property. Assume I am able to refinance and draw $100,000 from existing home, and use it as downpayment to purchase a new home.

 

My questions are:

1. Can I do the above? Is the interest on $100,000 redraw still considered tax-deductable?

2. From CGT perspective, if I get a valuation report of existing home, prior to turning it into investment property, will CGT based on this valuation or the price I paid when first bought the property?

 

Thanks.

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ATO Certified Response

Devotee

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Hi

 

1. the interest would not be deductable as it is used to purchase a home for yourself.

https://www.ato.gov.au/General/Property/In-detail/Rental-properties/Top-10-tips-to-help-rental-prope...

 

2.  the valuation would be used for CGT

 

https://www.ato.gov.au/general/capital-gains-tax/your-home-and-other-real-estate/your-main-residence...

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time

1 REPLY 1

Most helpful response

ATO Certified Response

Devotee

Replies 0

Hi

 

1. the interest would not be deductable as it is used to purchase a home for yourself.

https://www.ato.gov.au/General/Property/In-detail/Rental-properties/Top-10-tips-to-help-rental-prope...

 

2.  the valuation would be used for CGT

 

https://www.ato.gov.au/general/capital-gains-tax/your-home-and-other-real-estate/your-main-residence...

 

This is my personal view; I’m an ATO employee who chooses to help out here in my own time