IO Equity Loan - where to hold money

Viewing 7 posts - 1 through 7 (of 7 total)

icecric
Member
@icecric
Join Date: 2013
Post Count: 9
February 22, 2013 - 2:18 am
Hi Guy,
Have setup a new IO Loan from Equity of the PPOR to fund 20% deposit . The IP settlement is still a while away.
1) Is it ok from ATO viewpoint to place the money in offset (MISA) of that IO loan until IP settlement. That is what the bank has done.
2) Want to buy another IP later – deposit to be funded from the same equity loan – should I split the IO Loan for each property now or later?
Regards
xx
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
February 22, 2013 - 3:18 am
Better to place it back into the loan itself and redraw later – only redraw for IP purposes.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
February 22, 2013 - 1:20 pm
1. If you do this you will lose the connection between borrowing and investing and in my view you run a high risk of not having the interest deductible. Don't do it without advice. If you do do it then make sure that offset account has no other funds in it.
Best to use a LOC for this very reason. Or put the money back into the loan – some banks do not allow this though. I had some trouble with ANZ recently for a loan doing a small increase.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
February 22, 2013 - 10:13 pm
ANZ will let you place the funds back into the loan – but if the balance of the loan goes to $0, the account is automatically closed so the borrower needs to leave a little bit owing.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone Me
Mortgage Broker assisting clients Australia wide Email: [email protected]
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
February 23, 2013 - 7:36 am
Jamie M wrote:
ANZ will let you place the funds back into the loan – but if the balance of the loan goes to $0, the account is automatically closed so the borrower needs to leave a little bit owing.
Cheers
Jamie
Hi Jamie
This was a loan increase and I tried to get anz to leave the funds there available as redraw or draw down and pay back in but no luck (just had an idea now – could have paid out as a bank cheque and client deposit back in).
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email Me
Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
icecric
Member
@icecric
Join Date: 2013
Post Count: 9
February 26, 2013 - 12:22 pm
Thanks – have put the money in loan account less 1K to avoid loan closure.
s0805
Participant
@s0805
Join Date: 2006
Post Count: 85
March 14, 2013 - 12:15 am
Hi ,
I am not expert at this, but can advise that I was in same boat. I've done
1) this point. I agree with TerryW that to make sure offset account linked to this IO has no other funds apart from the excess fund which will be used at settlement. I, still have this offset account open with some excess funds, which I am planning to put in redraw and close this offset account. I am with ANZ and they do not have any fees for redraw.
My accountant has confirmed this setup is fine, but the important thing is the excess money ( which I will put in redraw) should only be used for Investment purposes in future not for personal use.
Hope this helps
S0805