Hi. We have started using our LOC for personal use, but since the interest/costs etc can only be claimed for the investment portion, does anyone here have any suggestions on a spreadsheet/program etc that allows the entry of details, and then at the end of the fin.year, my accountant can determine useage of loan etc.
This can get a bit tricky.
It should be pretty straight forward in working out interest. Just assume you have two loans, IO and aportion the interest separately. Calculate it montly
eg, if you took out $7000 on 5th of Oct, you would calculate $7000 x interest rate/365 (for number days in year) x 26 (for number of days left in Oct). That would give you Oct's figure as it is a part month. THen for each full month you would just do $7000 x interest rate/365 x no. days in month.
But if you are capitalising interest it will get a little more complicated. However, you just add the interest at the end of the month to the total for the new month.
The investment portion would be the total interest less this personal use interest.
Beware though as the ATO requires you to apportion each repayment between the two loans. You cannot just have all your extra repayments going to the personal use portion. So if your loan for investment was $93,000 and personal use $7,000, then personal use is only 7% of your loan. So if you make a principle payment of $10,000 only 7% of this can come off the personal use portion.
This is why it is best to have separate loans for Investment and personal use as you would want to pay all the personal use loan off first.
Does this make sense?
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
If i have a cashed up business and a personal home loan in my name- does anybody know if I can transfer money from the business bank account and dump it onto my personal loan for short periods of time. Then redraw it out and transfer it back prior to financial year or just before the buiness needs it?
It will save my personal loan interest rather than sit it in an account or in term deposit etc.It's not a wage as it will be transfered back. No refundable loans aren't legal anymore.
This would save me money.
Anybody know the answer?
Briganti,
The solution could be to have an Offset account linked to your personal home loan. Money is on call. Balance will reduce home loan interest and you can transfer the money back out to business account when you need to. Just something to consider .
Make sure offset balance is subtracted from personal home loan balance for loan interest calculation.
Some offset accounts subtract the interest earned at lower interest rate in offset account from home loan .
Probably you could run business account straight from an offset account in your business name linked to your personal home loan.
Ask your bank about if this feature is available to you.I agree with Duckster on this one a 100% Offset A/c makes it so much more simplier.
I have many clients who lodge their BAS quarterly and transfer their GST liability from their Business A/c to their Offset Account and then transfer it back when the GST needs to be reapid. With lump sums sitting in the Offset Account for 90 days or so at a time the interest saving can be quiet significant.
Richard Taylor | Australia's leading private lender
Briganti
It would also depend if your 'business' is a company. If it is, it is a separate legal entity and you should have special loan agreements in case – otherwise the ATO may deem it a dividend payment and tax you on it.
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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