Hello,
I currently have an investment property that is P&I with offset (was PPOR) and I am looking at building on two blocks of land which are IO int he next few months.
My question is if I convert my current investment property to IO and hence slightly reduce my cash outflow, should I continue to place any excess cash into my offset account (and reduce my interest, hence almost reaching positvely geared) or should I place the money into an internet savings account.
I am well into the second highest tax bracket for tax purposes.
My dilemma is should I reduce my tax deductible interest or should I generate interest that I have to pay tax on?
any help is greatly appreciated.
Thank you.
Do you have a spouse on a low income? maybe a savings account in their name would mean no tax is payable.
I suggest you just work it out – the different scenarios. eg $1000 off the loan means xx less interest = YY more tax. Is this great than the amount you would receive if you used the savings account?
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
My spouse is not on a low income. but thanks anyway
As Terry mentioned merely work out the marginal Tax rate on both scenarios and see which one stacks up better.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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