Hi there,
I have a $30k saving sitting in my offset account to my PPOR home loan. I want to pay down my PPOR home loan so to in crease my equity in my PPOR. Then I want access this equity to purchase my IP. Will this $30k tax deductable?
Thanks,
Chea
Yes it will be deductible. However once you use it to pay down your PPOR loan, accessing the whole $30K will depend on the LVR on your PPOR.
Yep, should be. You'll need to set it up as a separate loan though so you can determine your non tax deductible debt from your tax deductible debt.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
The interest on this will only be deductible if:
1. It is used for investment or business purposes, and
2. If it is properly transacted – you could lose deductibility if it passes through a savings account or cheque account.
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
I apologise for my ignorance but why wouldn't you just use the money straight from your offset account?
Paul B. wrote:I apologise for my ignorance but why wouldn't you just use the money straight from your offset account?Because the interst on the home loan would increase and this would not be deducitble.
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
Like Terry said, doing it that way is going to increase your non-tax deductible debt whilst reducing your tax deductible debt. Not a good outcome.
Think of it this way.
You have a $100k owner occupied loan.
You have $30k sitting in the offset account.
So you're paying interest on $70k.
If you took that cash out to fund an IP, you'll start paying interest on $100k.
However, if you restructured the loans and created a $70k loan split (owner occupied debt) and a $30k loan split (the equity release for IP purposes) you'd have a $70k non-deductible debt and a $30k deductible debt.
A better outcome.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Paul case of use it and lose it.
Structured correctly you can have your cake and eat it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thank you all for your comment. It's very helpful.
Regards,
Chea
This structuring of finance stuff is addictive! Thanks for the help.
So true Paul and it is where most clients come unstuck.
Had a forum member from Sydney ring me yesterday who had sold her IP and her Bank had told her to pay back the net sale proceeds straight into her PPOR loan.
They told her when she needed the funds on the next IP just go ahead and redraw it………
On a $300K redraw that has just lost you the best part of $18K interest deduction per annum.
No point in going back to your Banker when the Accountant / ATO break the news to you as they will have moved onto to another Branch or shifted Departments.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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