Hi Guy,
Have setup a new IO Loan from Equity of the PPOR to fund 20% deposit . The IP settlement is still a while away.
1) Is it ok from ATO viewpoint to place the money in offset (MISA) of that IO loan until IP settlement. That is what the bank has done.
2) Want to buy another IP later – deposit to be funded from the same equity loan – should I split the IO Loan for each property now or later?
Regards
xx
Better to place it back into the loan itself and redraw later – only redraw for IP purposes.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
1. If you do this you will lose the connection between borrowing and investing and in my view you run a high risk of not having the interest deductible. Don't do it without advice. If you do do it then make sure that offset account has no other funds in it.
Best to use a LOC for this very reason. Or put the money back into the loan – some banks do not allow this though. I had some trouble with ANZ recently for a loan doing a small increase.
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
ANZ will let you place the funds back into the loan – but if the balance of the loan goes to $0, the account is automatically closed so the borrower needs to leave a little bit owing.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:ANZ will let you place the funds back into the loan – but if the balance of the loan goes to $0, the account is automatically closed so the borrower needs to leave a little bit owing.Cheers
Jamie
Hi Jamie
This was a loan increase and I tried to get anz to leave the funds there available as redraw or draw down and pay back in but no luck (just had an idea now – could have paid out as a bank cheque and client deposit back in).
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 – have put the money in loan account less 1K to avoid loan closure.
Hi ,
I am not expert at this, but can advise that I was in same boat. I've done
1) this point. I agree with TerryW that to make sure offset account linked to this IO has no other funds apart from the excess fund which will be used at settlement. I, still have this offset account open with some excess funds, which I am planning to put in redraw and close this offset account. I am with ANZ and they do not have any fees for redraw.
My accountant has confirmed this setup is fine, but the important thing is the excess money ( which I will put in redraw) should only be used for Investment purposes in future not for personal use.
Hope this helps
S0805
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