My wife is starting a business and just wondering has anyone used a home equity line of credit on ppor to do this before?
My questions are:
– Is it possible?
– Is there any tax liabilities in doing so?
– Does this get messy around tax time? HELOC will only be used for this purpose and no private expenditure.
– At tax time would it be difficult to prove that it was only used for a business venture?Thanks in advance for your answers
Many small businesses use such products to support their business lending and in answer to your questions:
1) Yes it is possible with some lenders. Others do not permit the funds to be used for business purposes or wish to charge a higher rate of interest. Check with you lender whether they allow such purpose.
2) The interest charged on the funds used for business / investment purposes will be Tax deductible.
3) As long as you only use the account for the business i cant see it getting too messy. Some lenders allow for multiple sub accounts which means you could allocate the individual accounts for specific purposes i.e A/c # 1 = Business expense, A/c # 2 = IP expenses.
4) Retain all of you loan statement relating to the business account and you should be fine.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
thanks heaps Richard
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