Why go with CBA? Their offset is not fully transactional.

And, why have an offset on an investment property loan? It would be better on your home loan, assuming you have one.

What if rates drop further?
What if you want to sell?
What if you want to access equity but your bank won't let you and you need to refinance?

You will have to look up the FHO act in the state of the property and work through it to find out. Also look at the definition of 'spouse'.

Yeah, he will get charged with fraud and go to gaol probably, but his wife has just saved $13.5million dollars.

You don't know what you don't know do you. But it could have been set up so much more effective. Imagine if you hadn't paid down your LOC, but instead used an IO loan with 100% offset from the beginning. $151,000 x 7% = aprox $10,000 pa. That means you have just lost a tax deduction of $10,000 pa for the next 30+ years.

The bank shouldn't be giving tax advise either, what they are saying is incorrect

Don't worry, that dog was a gift and the appropriate tax was paid first.

If you are renting then paying more money into an investment loan means you will have less cash available for private expenses.

imagine if you had $100,000 cash and then used this to purchase an investment property, a year later you decide to go out and buy a house to live in. Net result is you have a $100,000 higher loan on your home and a lower loan on your investment. This would mean about $7,000 pa less in tax deductions.

Ok, so you have a PPOR loan and an IP loan already?

If that is the case you would be saving more tax in you paid the money into the loan and then reborrowed it, under a separate split, for investment purposes. You would b reducing non deductible debt and increasing tax deductions.

You really shouldn't go to a bank yourself. It is like doing your own conveyancing, risky!

The money in your offset account is cash so if you use it up and then require cash later for personal expenses you may have to borrow it back and this may create adverse tax consequences. However this may save LMI.

Do you have a home loan? if so then paying the money into the home loan and reborrowing may give greater tax advantages.

If no home loan then using the cash now will mean you have less cash later to pay for a home loan (which means more non deductible interest).

But, following the case of Steele v FCT the ATO has released a ruling stating that holding costs could be claimable against income if the intention is to construct a property for rent.