Hello,
My partner and I have a P and I home loan on our only IP.The loan does not have an offset account. We have high cashflow per month that could reduce the interest payable if we were to depoist the funds each month, and redraw as needed.Hence I wanted to know if there were adverse affects of using this setup come tax time or otherwise?Thanks,TroyIt would be unwise to deposit the money into the loan.
Each deposit is a repayment, and each withdrawal is new borrowings. So if you have high cashflow and make high deposits and withdrawals your claimable loan would rapidly decrease. So you may still be left with a large loan but no be able to claim any of the interest.
A far better way would be to use a 100% offset account so you can save the same interest, but not pay the loan down,
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
As Terry mentioned certainly do not pay into the loan as the interest on each redraw for personal use will not be tax deductible and you will be comitting Accounting suicide.
Obviously if you still have a mortgage on your PPOR then attach the 100% offset account to this loan and if not link it to you IP.
Richard Taylor | Australia's leading private lender
Terry/Richard,
Thanks for your prompt replies. I had an inkling that this would not be wise but after searching the forums and internet, I could not get a definitive answer.Thanks,Troy
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