All Topics / Creative Investing / Taking Equity Out from my PPOR and Invest in Shares
Ideally just take the money from the loan direct to the purchase/deposit etc. This is not always possible though, esp if there is no cheque account on that loan. You could get a bank cheque drawn up maybe, but a bit of a hassle.
If you are going to do it then better to transfer the money to a new account. If the account already has funds in it how do you distinguish the funds and only remove the borrowed portion. Its like urinating in a bucket of water – how can you just take out the water once they are mixed.
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
I do this often,
Just set up several offset accounts. The offset account A may be for the investment related acquisition. The ATO is real……..
Comments from above, You must have an income for the interest to be tax deductible. If NWS does not distribute a dividend then interest is not deductible that that financial year but may increase the cost base for CGT purposes.
PaulTextor wrote:Talismans wrote:Can the interest payment be deducted from the capital gain as well if I sell the share less than a year at a profit?
No. Interest can only be deducted from your income. Only capital losses can offset capital gains.Cheers
PaulThis is not correct. Revenue losses can offset capital gains.
eg. Say you had a CG of $50,000 but an income loss of $30,000
The CG would be added to your taxable income so you would end up with -$30,000 + $50,000 = $20,000 income.
Or even better if you get the 50% CGT reduction.
Would this be correct Dan?
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 number8, dan and terryw
@ number 8:
Say for example, I have 80k in my PPOR offset account.
How can I just create another offset account? Does it mean I need to take another loan?
I can certainly deduct the interest from the IP rental income and this shouldn't be a problem.
This is actually more tricky then I thought…and this is a crucial…
@ Terryw:
I thought you can't deduct CG from the income loss because they should be treated seperately?
CHeers
TalismanTailsman
They are separate, CG and incomes, but do interact as in the end it is all income.
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
Many banks offer more than offset account, some you have to pay, others it is a part of the package. I am not sure if you will need to change your loan – as I do not know your bank and product you have.
Dan42 wrote:PaulTextor wrote:Talismans wrote:Can the interest payment be deducted from the capital gain as well if I sell the share less than a year at a profit?
No. Interest can only be deducted from your income. Only capital losses can offset capital gains.Cheers
PaulThis is not correct. Revenue losses can offset capital gains.
Sort of….just to clarify…..
E.g., Let's say you earn $100K p.a. from your job, you pay $15K p.a in interest, and you have a $20K capital gain for that financial year (and for the sake of the example, let's say that you do not qualify for the 50% capital gains discount).
My understanding is that it works like this:
The $20K capital gain is added to your $100K income to calculate your assessable income. Then the $15K is subtracted as a deduction, and you you end up with your taxable income.To reduce the $20K being added to your assessable income in th first place, you would need to have a capital loss (either in the current financial year or brought forward from previous financial years). Income and capital are two separate things.
Cheers
PaulAnyone looking to redraw on their PPOR home loan for investment purposes should read tax ruling TR200/2. Just search on the ATO’s website and it’ll pop right up.
This thread on another forum may also be useful: http://www.aussiestockforums.com/forums/showthread.php?t=18340
I for one would be extremely cautious about doubling up your gearing with a margin loan. Have you calculated the returns you have to get from your shares in order to beat the interest? Is it realistic in the long or short term?
My apologies, it’s TR2000/2, and searching the ATO’s website returns nothing. Here is a direct link to the article in the ATO’s online law database:
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