LOC or Offset After Sale

[Chomp]

Can anyone help me out here, I am getting a bit confused !

I have just done a sub division and sold the rear block, just waiting for the title to come through so we can settle.

Basic Figures are I owe 800k on the whole thing, this includes stamp duty and LMI costs, rear block sold for 410k and the front house is valued at 575k by the bank last week.

So what is the best thing for me to do so I can access the equity, I do want to go to 90% as LMI has already been paid.

1. reduce mortgage by maximum amount using all of sale funds and get an loc up to 90%

2. reduce mortgage by minimum amount and put the rest in an offset acc

In my mind option 2 is better as I can use the funds for what ever I want and the interest on the loan will all be tax deductible. I am contemplating using the funds for annuities to get me over the line for the next one and then sell out and use for living expenses.

Re Chomp

 

[Terry_w]

Can anyone help me out here, I am getting a bit confused !

I have just done a sub division and sold the rear block, just waiting for the title to come through so we can settle.

Basic Figures are I owe 800k on the whole thing, this includes stamp duty and LMI costs, rear block sold for 410k and the front house is valued at 575k by the bank last week.

So what is the best thing for me to do so I can access the equity, I do want to go to 90% as LMI has already been paid.

1. reduce mortgage by maximum amount using all of sale funds and get an loc up to 90%

2. reduce mortgage by minimum amount and put the rest in an offset acc

In my mind option 2 is better as I can use the funds for what ever I want and the interest on the loan will all be tax deductible. I am contemplating using the funds for annuities to get me over the line for the next one and then sell out and use for living expenses.

Re Chomp

Seek tax advice on the proportions of the loan relating to each property. You will probably have to pay down the existing loan a certain amount.

If the front is the main residence you may want to consider paying all off the loan and then reborrowing to invest.

 

[Colin Rice]

Pay down the loan from proceeds of sale and re borrow to access the equity available. Split the LOC from the remaining property. But in saying that the first step would be to do what Terryw said;

"Seek tax advice on the proportions of the loan relating to each property. You will probably have to pay down the existing loan a certain amount".

 

[Chomp]

ok thanks, will talk with my accountant,

Re
chomp