Dear Fellows,
I have been reading this great community silently for few months & has great faith that my query will have a solution here.
I have savings of $230k in Bankwest Telenet Saver. I intend to Buy a PPOR (upto max $300K) & intend to buy a small running business (upto max $350K) with that savings. I have spoken to few mortgage brokers & taken advice of 1 accountant regarding allocation of investment into home & business but none of them are able to provide a definite structure & allocation & now I have 2 different situations to choose from.
1. Buy a Home PPOR with using 20% deposit ($60K) & use $240k Home Loan. That way, I will have $170k savings left which can be used to purchase a business (considering the budget constraint, I guess it will have to be a small franchisee). Business will be 50% financed + 50% savings.
2. Buy a HOME PPOR using full savings $230K & for the rest use Home Loan for $60k. Then, use line of credit appx. $170k to purchase a business (50% finance + 50% equity).
Intention is to use maximum deduction possible.
Which is the better option ? Your suggestions & helpful tips is greatly appreciated. Any other ideas most welcome.
Thank you all.
In the post above, in option 2 it should read like – "Buy a HOME PPOR using full savings $230K & for the rest use Home Loan for $70k.". Apologies for the error. Thanks.
Vish
If you are asking us to comment solely on the 2 options then clearly you would use the whole of your deposit on the PPOR and use the balance of equity to bowwor against to fund the IP or business investment as the interest is Tax deductible.
In saying this the structure of the loan and the business acquisition is extremely important as it likely that the LOC will need to be in the name of the Trust for which you are purchasing the Business in.
Remember also to utilise the offset account to place your GST credits in during the BAS period (quarterly / annually).
No doubt your mortgage broker can ensure that it is structured correctly .Richard Taylor | Australia's leading private lender
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