I would like to live in my rental home and rent out the house I
currently live in. How is this best done?
Q.
I own my own home valued at $400k, I have just bought another
property that I am currently renting valued at $340k on which I
have a bank loan for the total value. In the future I would like to
live in my rental home and rent out the house I currently live in.
Can I get a bank loan against my current property for its full
worth and then turn it into a rental property and then go and live
in my rental property pay off the debt with possibly some money
left over once it is fully paid out?
A.
You can claim the interest on the second property as long as it
is rented, but you can't when you move into it. The property the
mortgage is over is not relevent to the tax deductibility of the
loan. A better option may be to sell the first property tax free
when you decide to move - you could always borrow 100% of the price
of another investment property.
Each week financial advisor Noel Whittaker answers your
questions.
