Loan structure split
Question from Lisa updated on 26th August 2020:
We currently have a home and income property. We live in the three-bedroom flat and rent out the two-bedroom flat. Based on the floor area, the rental is about 36% of the whole property. Can we structure our home loan based on its market value at 36%-64% ratio?
We’d set the 34% at interest only and the rest with fixed/offset so we can pay off the main house where we live faster. I understand we can claim expenses including interest rates in the rental but not with the house we live.
Our expert Mark Withers responded:
No, I don’t believe that arrangement would stack up as all the lending was used to buy the entire property. The arrangement may have worked if there was shared ownership with a tenant in a common arrangement but not where one loan originally was used to buy the entire property. You can claim the interest in relation to the percentage of the rented portion, along with other costs like rates and insurance.
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.
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