re: Where to release equity

[jasperjue]

Hi
Just a quick question

I have equity available in my PPOR and in my Ips.

I am looking to release some equity in one of them to fund the deposit and costs of another IP.

Does it make more sense to grab the equity out of the PPOR or the IPS. ?

I think its the PPOR however i am trying to understand why ?. either way i end of with deductable debt. There is the phrase "debt recycling" in my head but i still can't quite connect the dots.

If someone or everyone can explain which is the better option and why it would be much appreciated?.

 

[Perp]

Does it make more sense to grab the equity out of the PPOR or the IPS. ?

It doesn't matter in terms of tax deductibility; as you've pointed out, in either case the interest will be deductible. So it's a matter of where it's easiest to get access to the equity, or which has the most accessible equity.

If you're exceedingly risk-averse, then you may prefer to secure this against an IP rather than your PPR, so that your risk of losing your PPR is lower if the investment doesn't work out. But even if you do have trouble paying the investment loan and it's secured against your PPR, you could sell one of the IPs - before getting into trouble! - and your PPR would be protected.

 

[jasperjue]

thanks Ozperp. I think i will target the IPS equity and keep any potential mess in the one spot.

 

[Rolf Latham]

Hi Jasper

doesnt need to be a mess

structure it the way that your accountant wants it if at all possible, thence everything will be clean !

ta
rolf