Home loan to investment loan

Viewing 7 posts - 1 through 7 (of 7 total)

desmo
Participant
@duke76
Join Date: 2015
Post Count: 3
July 30, 2015 - 4:53 am
Hello
This has probably been addressed before but I’m new to this so please humour me.
Here’s my question
My partner and I both have mortgages of just over $100k on each of our houses in Perth. We are about to move into one house and looking at renting out the other. Can we use funds in the off set account of the house we are looking to rent to pay off the loan on the house we are going to live in, then claim the interest paid on the soon to be rented house to reduce tax paid by the owner of that house. The interest payment would have effectively gone up by the reduction of funds in the off set. Is this allowed.
Thanks very much for any advice offered
Cheers
John
Benny
Moderator
@benny
Join Date: 2002
Post Count: 1,416
July 30, 2015 - 8:09 am
Hi Desmo,
The interest payment would have effectively gone up by the reduction of funds in the off set. Is this allowed.
Your words sound to me like you are doing things absolutely correctly. An Offset account has your spare $$ sitting in it, and, being your money (Tax paid, etc) may be used for any purpose at all. The removal of those funds from the Offset account would have the mortgage payments increase back up to the original mortgage amount owed (and no more than that). i.e. you are not loading the soon-to-be-rented house’s mortgage with extra amounts, but simply reverting it to its original state.
If that is so, I would think you are ALL GOOD….. But hey, I am not an adviser (not accredited, etc) so do look for answers from others with a signature that shows their profession. My views should be treated as opinion, yet to be verified…. ;)
Benny
desmo
Participant
@duke76
Join Date: 2015
Post Count: 3
July 30, 2015 - 10:54 pm
Thanks for your info, appreciated.
Corey Batt
Participant
@cjaysa
Join Date: 2012
Post Count: 1,010
July 31, 2015 - 6:07 pm
Definitely the way to go. One option I’d suggest is revert the soon to be PPOR’s loan to interest only and put the funds in offset instead of paying the PPOR down. That way if you want to buy another PPOR in the future you can just access the offset funds and retain deductibility on the remaining investment debt – much like you’re doing now.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
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Investment Focused Finance Strategist - servicing Australia-wide
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
July 31, 2015 - 10:40 pm
If your funds are in the offset account you can just withdraw then and the interest on the loan will increase. Providing this loan relates to the purchase of the property the extra interest would be deductible once that PPOR becomes available to rent.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
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Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Jamie Moore
Participant
@jamie-m
Join Date: 2010
Post Count: 5,069
August 1, 2015 - 9:01 am
Hey John
I’m not an accountant but what you’re doing sounds fine. If you were redrawing the money from the actual loan it would be a different story – but taking it out of the offset should be fine.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
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Mortgage Broker assisting clients Australia wide Email: [email protected]
desmo
Participant
@duke76
Join Date: 2015
Post Count: 3
August 8, 2015 - 4:06 pm
Thanks again for your advice all