I currently own a house that I'm renting out, effectively an accidental landlord due to relationship break up and then CHCH quakes. I've got $130k equity in it (mortgage $370k), and it was valued at $500k last May when I purchased it; probably be worth more now in the CHCH market since it's on TC1 land out west.
It should be getting EQC done later this year, and then I plan to sell it early next year, hoping for $530k or more. Then I figured I would build a new energy-efficient house as my PPOR (currently I'm renting myself) since IMO it doesn't make sense to buy in the CHCH market with the interest rates being so low at the moment.
So what I'm wondering is how could I go about using the equity in the rental as security against a section? Apparently sections generally need 20% deposit, and I'm looking for a section less than $250k, ideally around $200k.
In practice, how can this be structured so that I can continue to claim 100% interest from the rental mortgage as tax deductible? For example it could be possible (bank willing) to increase the rental mortgage by $40k to use as deposit for the section, and then get $160k on a mortgage against the section. But if I did that I'd no longer be able to claim 100% of the interest from the rental against my tax.
So how does this generally work? What are the risks? Any fish hooks?
It should be getting EQC done later this year, and then I plan to sell it early next year, hoping for $530k or more. Then I figured I would build a new energy-efficient house as my PPOR (currently I'm renting myself) since IMO it doesn't make sense to buy in the CHCH market with the interest rates being so low at the moment.
So what I'm wondering is how could I go about using the equity in the rental as security against a section? Apparently sections generally need 20% deposit, and I'm looking for a section less than $250k, ideally around $200k.
In practice, how can this be structured so that I can continue to claim 100% interest from the rental mortgage as tax deductible? For example it could be possible (bank willing) to increase the rental mortgage by $40k to use as deposit for the section, and then get $160k on a mortgage against the section. But if I did that I'd no longer be able to claim 100% of the interest from the rental against my tax.
So how does this generally work? What are the risks? Any fish hooks?
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