All Topics / Legal & Accounting / Offset Account Deductability – Technical Question

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  • Profile photo of dachiadachia
    Member
    @dachia
    Join Date: 2008
    Post Count: 1
    March 2, 2010 - 4:01 am

    Hi Steve/All,

    I have a scenario that hopefully one of you expert will be able to assist.

    Currently:

    I have a principal residence (A)  and an investment property (B) that is being rented out.

    If I sell my main residence (A),
    park the sale proceeds from the sale in the loan offset account of the investment property (B) – thus technically pay no interest due to the offset account benefit.

    and live in that investment property (B) … say for a 1 year as my main residence.

    Then
    later down the track I buy a replacement principal residence (C) using that same funds drawn out from the offset account of the investment property.

    So if I re-rent that investment property (B),
    will I still be eligible to get the full interest expense tax deductions benefit as the same amount like the first instance?. (after pulling out funds out of that offset leaving the existing debt balance same as in the first instance prior to selling property A)

    Hope my story make sense.?

    Many Thanks
    David

    Profile photo of YoungInvestorYoungInvestor
    Participant
    @younginvestor
    Join Date: 2003
    Post Count: 377
    March 2, 2010 - 10:23 am

    Yes!

    And in fact the best way to do it is with interest only loans. Make sure you pay all available funds into the offset account rather than reducing interest.

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