[jateParticipant@jateJoin Date: 2013Post Count: 26]

July 4, 2016 - 1:57 pm

Quicken rental property manager is what I use, but find that it is not Australian specific.
but it goes a reasonable job for data entry of income/expenses with categorizations.
Interested to know of any other software though as I’m sure there must be better ones out there.

[jateParticipant@jateJoin Date: 2013Post Count: 26]

July 4, 2016 - 1:55 pm

quicken rental property manager

[jateParticipant@jateJoin Date: 2013Post Count: 26]

July 31, 2014 - 8:13 am

Thanks all for your input. I’m glad to hear that either way I go achieve the same outcome in terms of the borrowing. I guess for some reason I feel it safer to have the securities against my IP’s than over leveraging my PPOR.

In regards to the Line of Credit I have with Commonwealth Bank, called them up this morning wanting to stop the capitalisation and to pay the interest portion from one of my other translation accounts and was SHOCKED to hear that for the LOC product with CBA, that this was not possible?

Not sure if the service desk staff was clueless or really it is the case…. Anyone else with CBA too?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

July 29, 2014 - 11:13 pm

Thanks for the reply Kinetic.

Would the banks or any other parties (ie. Accountants, ATO etc…) look at the ‘debt’ differently if the security is against a PPOR vs the IP’s?

On a slightly separate note, If I go with option 1, when will my LOC ever get paid off? Currently the DEBIT interest is compounding on itself. Won’t this get me into strife long term if I continue this structure?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

March 9, 2014 - 9:55 am

Qlds007 wrote:

Hi Jate

Hate to say it seems go from bad to worse.

Think you definitely need a complete loan check.

Cheers

Yours in Finance

Hi Richard,

Thanks for your reply, but can you provide an explanation why you think my set up is so wrong?

To recap, I have it as:

• LOC (100% investment use) – used to pay deposit for IP#1 and IP#2. Interest capitalised.
• Transaction Account (100% investment use) – All rental income in, All deductable expenses out (interest repayments for IP(s), strata, water, management fees…etc)
• Loan IP#1 – Interest Only
• Loan IP#2 – Interest Only

[jateParticipant@jateJoin Date: 2013Post Count: 26]

March 9, 2014 - 3:55 am

Terryw wrote:

Why are you paying interest with the LOC?

What I meant is that my LOC account, which is used 100% for Investment purposes only. Such as deposits for IP#2 and IP#3.

I am planning on tax-deducting the debit interest incurred on this account.

Currently CBA has it setup with the debit interest for this LOC account is being capitalised.

Is there any problems with this setup from a tax-deduction perspective?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

March 2, 2014 - 8:44 am

Terryw wrote:

A better way

Loans

$200,000 for the PPOR secured by the PPOR

$200,000 LOC secured by the PPOR. This will be used for the investment

$240,000 loan secured by the IP

The remaining $60,000 and stamp duty etc for the IP will come from the LOC secured on the PPOR. Interest should be deductible if set up correctly and this will allow you to borrow 105% of the investment property value and have all loans stand alone with no cross collateralising of security.

I'm very glad you posted this example as this is exactly how I setup my loans when I started purchasing IP's recently.

However, I've got some follow up questions:

1) Currently my LOC (secured by the PPOR) interest is being capitalised, is this correct or should I instruct my bank to pay the interest for these capital expenses from one of my other Investment Transaction accounts?

2) Debt Recycling

(a) When my IP's gain equity and I go back to my Lender to pull out additional funds will I simply retain the same loan account but the amount increases or will I have to keep creating new loan accounts everytime I take out i pull out more equity?

(b) Once I have access to these additional funds, should I be dumping the lump-sum and 'reimburse' back the LOC account which I used to pay the initial deposit/acquisition costs, thus lowering the balance and the debit interest charges?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

February 11, 2014 - 1:06 am

Hi Jamie,

Yep 2014 new year's resolution told myself to be more much organized, hence I was trying to get everything pre-listed out and pre-categorized and into separate folders for each IP so that it would make it easier for the accountant rather that sending him a shoebox of just papers. Hopefully someone on the forums has some input on those items listed so I can get a head start.

Cheers,

[jateParticipant@jateJoin Date: 2013Post Count: 26]

February 10, 2014 - 5:30 am

FMS wrote:

If not enough available then pay down some of the PPOR loan and reborrow.  

I also did this about a month ago based on advice from my mortgage broker.

I had all my savings in my offset account against my PPOR but since an opportunity came up and I hadn't had the time yet to restructure my PPOR loan with a LOC to draw on the equity, I moved the funds from Offset –> PPOR Home Loan then performed a redraw immediately to pay for the deposit….this had a $0 balance difference by day's end (when I presume they calculate interest)

….but then now I'm thinking, hang on… the debit interest charged against my PPOR Home Loan account, still only represents 100% my personal PPOR loan debt. Where is the benefit of performing all this where I can tax deduct also the deposit interest?

Now that I have my LOC setup, am I supposed to reimburse my Offset account with the funds available from the new LOC? and therefore now the LOC Debit Interest is deductible?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

February 10, 2014 - 5:12 am

Jamie M wrote:

 I've done this personally with a couple of properties – kept upgrading and converting them to IPs. 

How does one actually 'convert' it from PPOR to IP? Is it just a simple matter of putting in a tenant and from that date onwards all deducatable expenese are now eligible?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

February 10, 2014 - 4:30 am

My buyer's agent organized a new policy for me a policy via EBM, Seems to be ok. $285 for a Victoria 2 Bedroom Unit.

Are EBM (Insurance Brokers) similar to how Mortgage Brokers kind of operate? In that they will search a number of deals for you then present the best one to you which suits your needs then you deal with the company then directly? 

I ask because it seems like my policy is direct with EBM itself and deal with them directly unlike a mortgage loan after the initial setup you pretty much deal with the bank itself.

Does that sound right?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

January 28, 2014 - 9:52 am

Wouldn't one advantage to this approach be that you would be reducing the 'risk' against the PPOR since the LOC is secured against your home and then 'shift' the liability so to speak to your IP LOC. That way if things turn sour, you may only loose your IP which you may care less about and is just another line in your excel sheet as opposed to your own PPOR home?

Over time I would think that he would build up enough equity in his IP's to never then use the PPOR as security.

[jateParticipant@jateJoin Date: 2013Post Count: 26]

December 13, 2013 - 10:26 am

ANZ Bank says they cannot do this where Repayment type = Interest only 

was planning on using my CBA Investment transaction account as the master. 

Opening a no-frills Aussie Home Loan for another property just purchased. 

Hopefully they will allow it. Last thing I need is more accounts. 

[jateParticipant@jateJoin Date: 2013Post Count: 26]

December 12, 2013 - 8:21 pm

Hi Colin, i too was thinking it would be as simple as that but the bank informs me that this is not possible because for interest only loans the amount is always a differing amount each month they won't know how much to deduct plus there is a 3 day delay from OFI so they said it's not possible?

im just trying to think how utility companies direct debit for electricity bills with differing amounts but the bank cannot?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

December 5, 2013 - 11:22 pm

Terryw wrote:

Hope your broker is not giving tax advice.

Not really, but he was explaining how he thought was best to restructure my loans/accounts I had.

He did make some comments regarding not to use my money directly to pay for expenses from my PPOR Offset account for Investment purposes directly as it wouldn't then be tax deductible. Then gave me the advice to use all the life savings I have been parking there to pay down my loan and then take out the equity via a separate LOC account which I can then use soley for investment purposes. Seemed to make sense.

Terryw wrote:

I am not sure I understand your diagrams. Do you have an offset account and a separate account savings account?

Yes. I'm with CBA, so the Offset account (aka. MISA) against my PPOR is somewhat useless to use as a normal day to day transaction account.

Plus it contains a whole bunch of savings from both myself and my wife jointly.

My little hobby of property investment i'm trying now to decouple and just do on my own with my own funds/salary and properties under my name only.

My normal transaction account is just what I use on a day to day basis for like lunch, coffees, petrol and other life's what nots.

Terryw wrote:

All rent and income should probably be going in the offset account. Do you have 2 LOCs? If so, Any reason?

Yes to minimise the non deductability I would agree with you, but if the PPOR offset account gets mixed with my income, rental property income, wife's salary plus everything, it just gets messy (for us anyway). Every month my wife and I are just diligently transfer a lump sum of whatever we don't need from our own transaction accounts into there.

2 LOC's came about because:

a) PPOR – described above. life savings against PPOR offset, used to split out PPOR loan. This is in joint names

b) IP#1 (solely under my name) – was refinanced from original lender to new lender and revaluation enabled equity to be taken out, new LOC was opened in the hope to finance a 3rd and 4th IP.

Terryw wrote:

What does the highlighted bit mean? Are you using one LOC to pay the interest on the other LOC or another loan? This would be capitalising interest – see my comments above

That was just a thought that popped into my head (thats why I listed it as Option 2) while trying to figure this whole web of accounts out and how to use them properly. But I highlighted it as it didn't seem like the right way to go about it, or if it was legal to do. Hence my early post raising the question which you have clarified.

[jateParticipant@jateJoin Date: 2013Post Count: 26]

December 5, 2013 - 9:57 am

Thanks Terryw and PLC. You guys are always so quick and on the ball on these forums.

Glad that you can provide such helpful hints and advice for us all.

All these new accounts I've suddenly acquired from my mortgage broker after refinancing/restructuring was really confusing me.

Very different to the simple days I used to have things where each accounts only corresponded to its property. It was neat.

Decided to map this out in a diagram today at work to get my head around how things used to be and possible options how I can go about things moving forward (see below). Hopefully i've got things right now *fingers crossed*

https://drive.google.com/file/d/0B027-SCim7iANlJLVVJELVhOTEE/edit?usp=sharing

Let me know if you got some better tips/suggestions?

[jateParticipant@jateJoin Date: 2013Post Count: 26]

December 5, 2013 - 12:31 am

Would anyone ever use a Line of Credit to pay off monthly loan repayment interests instead of taking it out of a normal transaction/savings/offset account? or will the banks somehow not really allowed because it too is 'borrowed' funds?

For example:

Property A – Loan – Monthly interest charges $111.11

Property A – LOC – $100,000 limit available

Property B – Loan – Monthly interest charges $222.22

Property C – Loan – Monthly interest charges $333.33

Therefore the LOC against property A with the high limit is treated as the "master" account where we normally pay for the utilities, bills, etc. can also be used to pay the Loan Interest repayments on Property A, B and C's loans? or would people normally just treat each one separate and use a standard transaction/savings/offset account to make payments to all 4 accounts directly?  

Of course, keeping in mind trying to maximise deductibility and all that too.

[jateParticipant@jateJoin Date: 2013Post Count: 26]

December 4, 2013 - 12:54 pm

FMS wrote:

Any reason why you dont move the 60k from the IP offset to join the 200k in the PPOR offset therefore minimising interest payments that are non deductable and maximising deductable debt on the IP? I dont think paying down your IP debt with the 60k in the offset is a good move based on the informtion disclosed thus far. 

 

Well previous (before reading these forums and didn't know better) I always thought the $60k which was via IP could not be mixed with PPOR funds. Basically, the $60k was an amount just to indicate a scenario where you would have a bunch of money leftover from loan borrowed, but not used + some rental income which was then used to just pay expenses direct from the same IP offset account.

Based on all the advice here and on other threads. I'm currently in the process of refinancing and fixing my rates, got rid of the offset accounts in the IP (as now I don't see any use for it) and pulled the equity out to start a new LOC account where I'm just going to use that now to pay all the expenses from my IP's. and of course, redirect all rental income to my PPOR Offset.

Seems like the best way to go moving forward.

[jateParticipant@jateJoin Date: 2013Post Count: 26]

November 29, 2013 - 3:10 am

FMS wrote:

If you accesed the 100k equity your loan would increase to 300k and your offset account would have 160k in it so interest would be calculated on the difference being 140k making no difference

Yes – of course! Silly me! How did I miss that. Totally embarrasing.

Ok so that would mean that the interest calculation would be the same (assuming that the new LOC rates are the same as the Loan/Offset one)

FMS wrote:

To answer your concern accurately it would be best if you could shed some light on the intended purpose of the 100k available equity in the IP.

Also would be helpful to know if you have a PPOR with any debt on it? 

My intended purpose of the 100k available equity in the IP (solely under my name) is to use it to grow my portfolio and buy more IP's along with pay for any expenses which that might incur in doing so such as buyer agency, deposits, building & pest inspections, loan setup fees and then later for the ongoing fees like utilities, borrowing fees, interests etc.

Yes I also do have a PPOR (shared with my wife) worth about $800,000 and a current loan balance of $600,000 with about $200,000 (cash of mine) in its offset account which I have been saving over time. The only reason I parked the money there was to lower the interest repayments while I figured out my next move. That is where my mortgage broker als othen suggested I do the same here on my PPOR. That is, use the $200,000 life-savings to pay down my home loan to $400,000 and then open up a Line of Credit for $200,000 against my PPOR to be used for Investment purposes.

Originally, I was trying to keep the accounts in my PPOR separate so that it wouldn't mess up anything with our own joint situation or affect my wife tax, accounts or what not while I continue to play with my little side hobby of property investing. However, of course, like everyone I'd like to minimize my non-deductable interest payments and maximise my deductable interest payments in the best structure possible without breaching any laws.

[jateParticipant@jateJoin Date: 2013Post Count: 26]

November 28, 2013 - 1:31 am

Hi Richard, can you please elaborate how I can do this correctly to be tax compliant?