All Topics / Legal & Accounting / What to do with spare cash/ portfolio?

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  • Profile photo of LancehaterLancehater
    Participant
    @lancehater
    Join Date: 2008
    Post Count: 19
    October 15, 2014 - 3:09 pm

    We have 5 properties, pretty much all neutrally geared, thanks to low interest rates.
    Was beginning to pay down LOC $150K on PPR, but is tax deductible as we are renting out.
    Question is what should we do with spare cash as I want to get all my deductions back at tax time.

    Have been advised to buy high dividend paying shares. Or should I just keep paying down loans and get equity that way ans start paying tax.
    We have 1.5 Million equity at he moment

    Profile photo of BennyBenny
    Moderator
    @benny
    Join Date: 2002
    Post Count: 1,416
    October 16, 2014 - 10:26 am

    Hi Lance,

    Question is what should we do with spare cash as I want to get all my deductions back at tax time.

    I guess the answer to the question should come from you. You have done really well, but the main question, I believe, is “Are you now finishing with the accumulation phase, and moving into consolidation? Or are you still looking to further grow your portfolio?”

    Your personal situation will have a major bearing on your answer. e.g. If you are looking to retire in a few years, perhaps you should be starting to consolidate what you have. The answer to your original question might well be different, depending on your answer to the above, as, in consolidation mode, the saving of Tax becomes way more secondary than before IMHO.

    Benny

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    October 16, 2014 - 12:03 pm

    If your goal is to get more deductions, donate your cash. You will get the benefit of a tax deduction and pay higher interest on the loans.

    If your goal is to make more money then it may be better to park the cash in a 100% offset account. But which account will depeend on the owership structure. e.g. spouse on a lower income then put the offset account on a house owned solely by the spouse.

    If you have another PPOR and don’t have any non deductible debt then you may just want to start paying down the loan with the highest interest rate too.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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