Turn your old home into your next rental property
Michael LaurenceDecember 7, 2020
A common strategy for propert i nvestors is to hold on to their old home as an investment propertywhile borrowing to buy a new home.
This presents an opportunity and a tax trap.
Interest payable on your old home’s remaining mortgage will become tax deductible once the property is available for rent.
However, interest on the loan for your new home is non-deductible.
“Beware of redraws,” warns Eddie Chung, partner and property tax specialist with accountants BDO in Brisbane.
“If you're draw on the old loan on the old home to buy the new home, the interest attributable to the redraw will not be tax-deductible.”
See our free ebook on the top 24 tax strategies for property investors.
