Hi all,
I am ready to jump into property investing and just have a query b4 I go to my accountant.
Hubby & I have a IP with an interest only loan (started in 2006 and IO period ends in 2010). This is linked to an offset account- in the last year we have paid very little interest on the IO loan. Have paid approx $10k in extra repayments (looking back now not sure why I did that).
My Q is, can I redraw the extra $10k i have paid to put a deposit on a new IP. New IP would probably be in Family Trust name (with hubby as the 'manager' and I having nothing to do with it).
I know there are tax implications in using redrawn funds for other items ie personal reasons and the tax deductions re interest, however considering we paid very little in interest, is this still a consideration.
Cheers
Karen
Yes, you can reborrow the $10k. The interest would be attributed to the new property. If you are using a trust, then you would lend the trust the money and charge it the same interest as your loan and the trust gets to claim the interest in its tax return.
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
Terryw wrote:Yes, you can reborrow the $10k. The interest would be attributed to the new property. If you are using a trust, then you would lend the trust the money and charge it the same interest as your loan and the trust gets to claim the interest in its tax return.Speaking like an accountant. Well said, Terry.
I do generally recommend a separate loan account for each property if possible because the Rental Schedule in the tax return requires you to show the interest attributable to each specific property.
Eddie
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