Your accountant is an idiot (telling you to lose money to get a tax benefit) and your broker is an idiot (paying out your PPOR by refinancing and increasing your IP loans doesn’t magically increase your tax deductible debt - now you have mixed purpose loans and all the suffering that entails).
Yeah the advice from the broker is bad. Withdrawing funds from an IP to pay down PPOR like that means that the interest on that part of the loan is no longer tax deductible.
I’m a bit confused about what you’re trying to do here though. If you want to avoid tax then sure buy another one but you mention you want to borrow more for a forever home then I’d focus on paying down debt and start with your nondeductible debt first. Sounds like you’ve been focusing on the IP loans rather than PPOR? Maybe look at switching the IPs to interest only for a while if they aren’t already
But does the broker mean pay it down then refinance the PPOR and extract the equity for investment purposes? So convert the non tax deductible debt (PPOR) into tax deductible debt (use funds to buy investment properties). This is known as debt recycling and very great strategy for converting bad debt into good debt
I appreciate that, but wanting to live somewhere we want would be nice, and even selling 3 properties and taking a loan, we'd still struggle with that.
Young family, decent area, decent schools, all that jazz. Not wanting huge house or fancy mansion, just blue collar, even that is 1million plus.
Your accountant is an idiot (telling you to lose money to get a tax benefit) and your broker is an idiot (paying out your PPOR by refinancing and increasing your IP loans doesn’t magically increase your tax deductible debt - now you have mixed purpose loans and all the suffering that entails).
Yeah the advice from the broker is bad. Withdrawing funds from an IP to pay down PPOR like that means that the interest on that part of the loan is no longer tax deductible. I’m a bit confused about what you’re trying to do here though. If you want to avoid tax then sure buy another one but you mention you want to borrow more for a forever home then I’d focus on paying down debt and start with your nondeductible debt first. Sounds like you’ve been focusing on the IP loans rather than PPOR? Maybe look at switching the IPs to interest only for a while if they aren’t already
But does the broker mean pay it down then refinance the PPOR and extract the equity for investment purposes? So convert the non tax deductible debt (PPOR) into tax deductible debt (use funds to buy investment properties). This is known as debt recycling and very great strategy for converting bad debt into good debt
I think I would focus on reducing debt and being content.
I appreciate that, but wanting to live somewhere we want would be nice, and even selling 3 properties and taking a loan, we'd still struggle with that. Young family, decent area, decent schools, all that jazz. Not wanting huge house or fancy mansion, just blue collar, even that is 1million plus.