We recently used a good broker who recommended in using an investment mortgage for a couple of our properties – all interest tax deductible. In addition, to imporve our cash flow, since one property is negatively geared, he recommended a drawdown loan that paid the interest each month on the investment loan – with the intention of claiming the interest on this loan as further expense in running the investment properties. Sounds great but waht experience have others had in getiing this to work with the ATO?
Thanks
DavidSee this recent discussion
https://www.propertyinvesting.com/forum/topic.asp?TOPIC_ID=23104Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.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
Thanks Terry,
Seems that this is not well established to date – I’ll advise when I have furnished my tax returns this year.
DavidWe have a separate loan which we use if we need to top up our repayments on our negatively geared last purchase. Our broker said many clients do claim the interest. Our accountant said not to take the risk.
Much as we respect our broker, we chose not to do anything that will jeopardise our position regarding the ATO. I have heard audits can be pretty gruelling and I like to sleep at night.
There are plenty of legal, non grey areas that we can claim.
Wylie.
Originally posted by Wylie:We have a separate loan which we use if we need to top up our repayments on our negatively geared last purchase. Our broker said many clients do claim the interest. Our accountant said not to take the risk.
Wylie.
Your broker should not have given any advice let alone advise you to commit tax fraud.
Just because people claim stuff and get a refund doesn’t make it OK. They will be audited someday and at best they will need to repay it all. At worst it will cost a lot in interest and penalties let alone a criminal record.
You asked your accountant and he was the one qualified to give advice. Brokers are not.
Well done.
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Simon,
I think you may have misinterpreted my post, or perhaps I didn’t word it as well as I could have .
Our broker simply told us during discussions about keeping our top up loan totally separate, that many clients do the opposite and claim interest. He certainly wasn’t advising us one way or the other. He suggested we check with our accountant, which we did.
Our accountant said it is a slightly grey area, and unless we got a private ruling, he advised against it..
I would always go with what our accountant advises. He is the one who will be holding our hands through a tax audit, if it ever happens.
Wylie.
Point taken – sorry to jump to that conclusion [blush2]
Simon Macks
Residential and Commercial Finance Broker
***NODOC @ 7.15% to 70% LVR***
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Another point with my idea, is if yu had the IP in the trust, you would be lending the trust money from the LOC, thus creating another laying separating this type of scenario from the Hart’s case. But it is a grey area, so check with your accountant.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.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
You must be logged in to reply to this topic. If you don't have an account, you can register here.
