Can someone please helpo me understand this strategy? What is it used for? the benefits? The disadvantages and traps etc…
The benefit of the interest only loan on investment properties is the tax deduction. As only interest is tax deductable, and not any money paid off the principle, you rely on your properties capital growth to build equity to borrow against or to make money at the sale.
Sorry I mean prepaying your interest. instead of paying it every month with your loan?
Hi Snow
If you look to prepay the interest on your loan then the entire years interest is deductible in the year in which it is paid..
This could be a year when your Taxable income was going to be higher than the following year.
Richard Taylor | Australia's leading private lender
Sorry Snow,
But yeah what Richard Said
Thanks guys
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