Savings in a redraw facility or savings account??

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bm17
Participant
@bm17
Join Date: 2010
Post Count: 47
February 3, 2011 - 10:08 pm
Hi everyone,
Just a quick question that hopefully some of the more finance savvy will be able to answer.
I currently have a loan against an IP with a redraw facility. I am looking at buying a PPOR soon (next 3 months) and was wondering, should they extra money i am earning (genuine savings) be put into redraw account or another high interest savings account.
I have read on other posts that having money redrawn counts as additional borrowings but because it for my PPOR rather than from my PPOR, i don't think this makes a difference regarding tax implications.
Any suggestions would be greatly appreciated.
Thanks
Richard Taylor
Participant
@qlds007
Join Date: 2003
Post Count: 12,024
February 4, 2011 - 12:19 am
If your loan does not have an offset facility and you have to pay it down i would set up a separate loan split for the redrawn amount so you can clear identify which loan interest is deductible and which is not.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Terryw
Participant
@terryw
Join Date: 2001
Post Count: 16,213
February 4, 2011 - 8:54 am
Putting it in redraw would mean paying down the loan. When you withdraw it the interest may not be deductible if you use the funds for private expenses.
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