{"id":25266,"date":"2016-02-14T01:00:53","date_gmt":"2016-02-13T14:00:53","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6998"},"modified":"2016-02-14T01:00:53","modified_gmt":"2016-02-13T14:00:53","slug":"refinancing-and-lifestyle-2","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/refinancing-and-lifestyle-2\/","title":{"rendered":"Readers’ Questions: Refinancing & lifestyle – Andrew Mirams"},"content":{"rendered":"

 <\/p>\n

Russell has asked us to further clarify a point made by\u00a0Andrew Mirams<\/strong>\u00a0in a recent show about refinancing.\u00a0In today’s show, together with Andrew Mirams<\/strong><\/a> from Intuitive Finance,\u00a0we\u2019re going to answer Russell’s question.<\/p>\n

Russell, we\u2019re going to give you a 12-month subscription to\u00a0Australian Property Investor<\/a>\u00a0<\/i>magazine for that excellent question.<\/p>\n

 <\/p>\n

Transcript:<\/h4>\n

Kevin<\/b>:\u00a0 We\u2019re going to answer a question in the show now from Russell. Thanks for the question, too, Russell.<\/p>\n

It is in relation to some comments that were made recently by Andrew Mirams from Intuitive Finance to do with refinancing investment, and in particular, Russel wants to know by refinancing, you could access your equity and use the funds for a deposit on a property investment to invest in stocks and shares at education costs to support your children in purchasing their own home. I guess the key question here is Russell wants to know what other things could this be used for as opposed to property? Could it be used for lifestyle?<\/p>\n

Andrew, it\u2019s a great question, isn\u2019t it?<\/p>\n

Andrew<\/b>:\u00a0 Yes, it\u2019s a fabulous question, Kevin. Thanks, Russell, for asking it. As experts, we tend to just roll these generalizations out and probably don\u2019t drill into the specifics like Russell has asked. I think it\u2019s a great question.<\/p>\n

The key here really is the purpose, Kevin, the purpose of what you\u2019re using the money for. It\u2019s his equity. If Russell has done well in his property portfolio and it\u2019s all increased in value and he wants to refinance it and use that equity, he can use it for whatever he wants. That\u2019s the end of the game.<\/p>\n

But the key is not what we would call blending personal use \u2013 so whether he\u2019s funding some education costs or he\u2019s going on a holiday or buying a new boat or a car as a reward for what his property portfolio has done \u2013 blending that with then a deposit on that next investment property because that makes it really difficult to determine your tax deductibility, and the ATO will often scrutinize that quite heavily.<\/p>\n

Kevin<\/b>:\u00a0 Therefore, obviously, the answer to the question is he can use it for whatever he likes, but he should use it in a separate sense. Is that right?<\/p>\n

Andrew<\/b>:\u00a0 Absolutely, and that is the key. Let\u2019s just say, he has three properties, his home and two investment properties. His home, he might have only just purchased, and that hasn\u2019t really gone up in value because he\u2019s just upgraded, but the two investment properties have gone up in value \u2013 let\u2019s just say for ease of numbers \u2013 $100,000. That means at 80%, he could access $80,000 for each.<\/p>\n

Now, he might have gotten active in the property market when he was just married and didn\u2019t have children, and now the kids are going to school, but he also wants to buy the next investment property. So in that case, he would do two separate lines of credit or interest-only loans, or whatever it be, but two separate facilities.<\/p>\n

One, you might say, \u201cLook. This is going to be for the personal use,\u201d and the other for the investment use.\u201d By doing this, you\u2019re quarantining both debts. One is very clearly used for personal use that can\u2019t be tax deductible or isn\u2019t tax deductible, and the other that is used for the deposit on his next investment, which very clearly is then for the purchase of an income-producing asset and is tax deductible.<\/p>\n

Kevin<\/b>:\u00a0 What about in the event Russell decides to buy a holiday home that he\u2019s going to use both as an investment but also wants to live in it, as well? Is that a different scenario again?<\/p>\n

Andrew<\/b>:\u00a0 That would need a little bit more analysis. I wouldn\u2019t use those two $80,000 scenarios. The key with holiday homes is how long is it used for rental and how long is it used for personal use? If the primary goal of this is as a personal-use asset, and he\u2019s going to use it for half the year and the other half, it\u2019s available for rent, then he really has 50% of it is available for tax deductibility, and 50% isn\u2019t because that\u2019s personal use.<\/p>\n

Now, you\u2019re really delving into some accounting advice, but there are ways that the accountants will split that on your tax return and things like that. Again, if that was the primary goal of what you wanted to do, you would just need a little bit more analysis around both of those scenarios, I think.<\/p>\n

Kevin<\/b>:\u00a0 Yes, great question, Russell, and a great answer from Andrew Mirams, who we\u2019ve actually interrupted on a break, and I want to thank you for joining us today, Andrew. Andrew Mirams, of course, is from Intuitive Finance and always a regular on our shows, and you\u2019ll find all the information about Andrew on our website, as well.<\/p>\n

Russell, we\u2019re going to give you a 12-month subscription to Australian Property Investor <\/i>magazine for that excellent question. We\u2019ll be in touch with you to get all the details, and you\u2019ll be getting the next edition with our compliments.<\/p>\n

By the way, too, if you send a question in and we choose it and you are already a subscriber to API, which Russell may be, well then we\u2019ll extend your existing subscription by a further 12 months with our compliments.<\/p>\n

Once again, Andrew, thanks for your time. Mate, you enjoy your holiday.<\/p>\n

Andrew<\/b>:\u00a0 My pleasure, Kevin. Thank you. All the best, and great question, Russell.<\/p>\n","protected":false},"excerpt":{"rendered":"

  Russell has asked us to further clarify a point made by\u00a0Andrew Mirams\u00a0in a recent show about refinancing.\u00a0In today’s show, together with Andrew Mirams from Intuitive Finance,\u00a0we\u2019re going to answer Russell’s question. Russell, we\u2019re going to give you a 12-month subscription to\u00a0Australian Property Investor\u00a0magazine for…<\/p>\n","protected":false},"author":176692473,"featured_media":7000,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,10,11,13,17,25],"tags":[101,116],"class_list":["post-25266","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment","category-sponsored-channels","tag-podcast","tag-refinancing"],"yoast_head":"\nReaders' Questions: Refinancing & lifestyle - Andrew Mirams - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/refinancing-and-lifestyle-2\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Readers' Questions: Refinancing & lifestyle - Andrew Mirams - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  Russell has asked us to further clarify a point made by\u00a0Andrew Mirams\u00a0in a recent show about refinancing.\u00a0In today’s show, together with Andrew Mirams from Intuitive Finance,\u00a0we\u2019re going to answer Russell’s question. 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