Hi all,
I have a question about tax and the easiest way to structure accounts. I have my own ideas, but I'll simply ask and see what others say and find out how wrong I was!
Basically, I have one IP which needs a bit of reno and looking at buying another. I have two ways of paying for this:
– LoC for investment. – Tax deductible
– Savings against PPOR. – Not tax deductible. The interest from the LoC is paid from this account.
How should I pay for the following expenses
– Stamp duty on new IP
– Deposit on new IP
– Other acquisition costs
– Other borrowing costs
– Renovation costs for the existing IP
Should it all come out of the LoC, or should I pay some out of the savings?
Thanks in advanace
Talk to an accountant but I'd use the LOC to cover all IP related costs.'
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]
As Jamie said I'd try and keep all IP related expenses out of the LOC otherwise thing will get messy at tax time
Tony Fleming | Triumphant Property Group
http://www.triumphantpropertygroup.com.au
Email MeNSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury
I personally would not be using cash for anything.
You could always borrow 100% of the new purchase price and use your cash savings as collateral security.
As the property increases in value you release the cash security, rinse and repeat.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard, that's an option I hadn't considered. You might have to explain it to me in a bit more detail though, but is it something like:
Assume I have saved the 10% deposit of a $350000 house. ~ $35000.
The $35000 sits in an offset account against my PPOR.
The bank then puts a freeze on the offset account so I can't reduce the balance below $35000.
The bank creates a loan account for the $35000 that is tax deductible.
The $35000 in the offset still reduces the interest on my PPOR.
Eventually, as the IP goes up in value I can release the $35000 from the offset.
If that's possible, then I'm definitely doing that.
TheNewGuy wrote:Thanks Richard, that's an option I hadn't considered. You might have to explain it to me in a bit more detail though, but is it something like:Assume I have saved the 10% deposit of a $350000 house. ~ $35000.
The $35000 sits in an offset account against my PPOR.
The bank then puts a freeze on the offset account so I can't reduce the balance below $35000.
The bank creates a loan account for the $35000 that is tax deductible.
The $35000 in the offset still reduces the interest on my PPOR.
Eventually, as the IP goes up in value I can release the $35000 from the offset.
If that's possible, then I'm definitely doing that.
Doesn't work like that. The offset account is savings and can be drawn anytime.
If you don't have enough equity you may have to pay the offset into the loan and then reborrow it.
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
Hi NG
As Terry mentioned i hate to say it is not that easy.
You can't have your cake and eat it.
Very few lenders offer such a products.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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