All Topics / Legal & Accounting / Home loan to investment loan

Viewing 7 posts - 1 through 7 (of 7 total)
  • Profile photo of desmodesmo
    Participant
    @duke76
    Join Date: 2015
    Post Count: 3

    Hello

    This has probably been addressed before but I’m new to this so please humour me.
    Here’s my question
    My partner and I both have mortgages of just over $100k on each of our houses in Perth. We are about to move into one house and looking at renting out the other. Can we use funds in the off set account of the house we are looking to rent to pay off the loan on the house we are going to live in, then claim the interest paid on the soon to be rented house to reduce tax paid by the owner of that house. The interest payment would have effectively gone up by the reduction of funds in the off set. Is this allowed.

    Thanks very much for any advice offered

    Cheers

    John

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416

    Hi Desmo,

    The interest payment would have effectively gone up by the reduction of funds in the off set. Is this allowed.

    Your words sound to me like you are doing things absolutely correctly. An Offset account has your spare $$ sitting in it, and, being your money (Tax paid, etc) may be used for any purpose at all. The removal of those funds from the Offset account would have the mortgage payments increase back up to the original mortgage amount owed (and no more than that). i.e. you are not loading the soon-to-be-rented house’s mortgage with extra amounts, but simply reverting it to its original state.

    If that is so, I would think you are ALL GOOD….. But hey, I am not an adviser (not accredited, etc) so do look for answers from others with a signature that shows their profession. My views should be treated as opinion, yet to be verified…. ;)

    Benny

    Profile photo of desmodesmo
    Participant
    @duke76
    Join Date: 2015
    Post Count: 3

    Thanks for your info, appreciated.

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    Definitely the way to go. One option I’d suggest is revert the soon to be PPOR’s loan to interest only and put the funds in offset instead of paying the PPOR down. That way if you want to buy another PPOR in the future you can just access the offset funds and retain deductibility on the remaining investment debt – much like you’re doing now.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    If your funds are in the offset account you can just withdraw then and the interest on the loan will increase. Providing this loan relates to the purchase of the property the extra interest would be deductible once that PPOR becomes available to rent.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hey John

    I’m not an accountant but what you’re doing sounds fine. If you were redrawing the money from the actual loan it would be a different story – but taking it out of the offset should be fine.

    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]

    Profile photo of desmodesmo
    Participant
    @duke76
    Join Date: 2015
    Post Count: 3

    Thanks again for your advice all

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

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