Hi,
Just wondering if anyone knew how the ATO would view this?
Have a separate IO account with redraw. I understand if you redraw money into a savings account it turns borrowed money into cash and hence lose the interest deductibility. What if I have a Credit card only used for IP upgrades/payments ect and then pay it off via bpay which comes strait out of the IP loan. Would that be OK for deductibility purposes?
cheers.
sammmeeeJust withdraw it into an account exclusively used for the IP, ask the bank to waive the fee or just pay it if you don't.
Its all about justification with the ATO, if you only use that account for IP expenses it is extremely easy and quick to prove. Ask your accountant. The bank only calls it a savings account you can call it anything you would like 'IP Account'. Just be disciplined with how you utilise the account IP stuff only. Happy investing.If investment property has enough equity you could go to the lender and apply for a line of credit loan account.
It works like a credit card in that when you need money you borrow it from the LOC and then pay it back. The line of credit facility becomes a loan when you draw money out of it . To be tax deductible it has to be borrowed for investment purposes. The interest rate is a lot lower than a credit card !Funds borrowed or paid for with a credit card are a loan, so when you borrow or take out money from a loan and pay into a cc you are really only refinancing this debt.
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
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