Hi,
Just seeing if i could get some advice on what to do. I have 2 loans, the first being around 170k for an investment property and a second of 200k for a failed business that isn't currently running anymore.
I have 50k in an offset account which is linked to both of these loans and am wondering if i should keep the 50k in the offset against both of these loans or Am i better off putting the 50k on one of these two loans?
If i put them on the loans is there any tax benefits etc?
Cheers
Offset accounts can only be linked to one loan – it will currently be linked to either IP OT business loan NOT both.
From a tax perspective you are better leaving the $50K as an offset against the higher interest rate of the two loans. This reduces your interest bill and means you have $50K of cash reserves up your sleeve in times of emergency. Using the $50K for a personal emergency from your offset has no adverse effect on tax claims (other than it reduces the interest saved by the commensurate amount)
On a side note it would be nice to get rid of the failed business loan – at the moment it will be holding you back as any future loan applications will register the loan as a liability.
You should seek tax advise as there are complex rules regarding continuing to claim deductions for a failed business.
ps. Did you use the same entity for the business as the investment? very dangerous.
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
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