If you are buying a property initially to live in, but to one day rent out, it is important to understand what is claimable and what is not from a tax perspective. As I'm not a qualified accountant I will refrain from offering specific advice however brief setails can be seen below :
A scenario may be as follows :
A client purchases an owner occupied property with a loan of $300,000. Five years later, purchases a new principal place of residence and converts first home into an Investment property. The original $300,000 loan has reduced to $200,000.
Assuming 5% Interest rate,our client can claim interest expense of approx $10,000 (assuming an average balance).
A strategy that could have been implimented when the first home was purchased involves establishing an interest only loan with an associated offset facility. End result is that original loan would be still $300,000 resulting in an interest cost of $15,000.
This strategy is not effective unless calculated Principal & Interest repayments are directed into the offset account throughout the loan.
To see how this may work for you please feel free to call/email me at any time.
Dwayne Brittain - Owner/Director - Mortgage Choice Knox
0428 434 084