Hi, just a quick question. I have a PPOR and 3 investment properties and one offset account account aginst the PPOR. All of my rent and salary is paid into this offset account and all of my mortgage payments come out of this account. Just wondeirng if I should have a second offset account linked to an investment property to handle all of the investment income and expenses such as interest. The only benefit I can see is that the investment expenses will be easier to track this way. The negative I see is that the money in the investment offset will be offsetting good debt and not bad debt. What are your thoughts? Thanks, Janice
Looks like you've already answered the question yourself
Interest from PPOR is not claimable, whereas interest from IP is claimable
So it's better to funnel all excess cash into the offset account against your PPOR
Unless of course, you can do something better with the money
I agree with kong, sounds like a good setup to me.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I just read in "Smart Borrowing Handbook" about using two accounts and I was wondering if I was missing something.Â
Where does the rent go into? Where do you pay the bills from? Where does the interest get debited from?
I have a LOC for that purpose. I only keep a small amount in it. It's easier for the accountant as everything goes in and out of that one account. Rent goes in, bills, interest goes out.
Catalyst wrote:Where does the rent go into? Where do you pay the bills from? Where does the interest get debited from?offset account
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:Catalyst wrote:Where does the rent go into? Where do you pay the bills from? Where does the interest get debited from?offset account Cheers Jamie
I was asking the poster where HER rent goes and where HER bills are paid to and from if she doesn't have a specific offset or LOC.
I have one offset account where everything goes into and everythign goes out of.  It is working for me but was just wondering if there was any point in having two offset accounts as recommended in a book I read. Sounds like 1 account is satisfactory so I will stick with the one account. Thanks everyone.Â
If you have non deductible debt then you should have the offset account on this loan. If you set up a second one on an investment loan you will end up paying more tax.
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
Terryw wrote:If you have non deductible debt then you should have the offset account on this loan. If you set up a second one on an investment loan you will end up paying more tax.That is what I thought Terry. Changing the subject a bit, "the Smart Borrowers Handbook" suggests that Line of Credit Loans can cause problems with differentiating which part of the loan is tax deductable once you use the redraw. It suggests an offset account is a better option. Interesting. I think Line of Credit loans can often have higher interest rates than loans with offset accounts too. I am finding this book quite interesting and would recommend it to others new to proeprty investing. It certainly highlights some of my mistakes that I have learnt the hard way. It covers loan strucuturing, buying property through super, choosing the right loan products, trusts, commercial finance……its very good.Â
Yes, def don't use a LOC for a standard loan because of the tax issues. If you do you will be left wtih a large loan with none of the interest deductible. Only use a LOC for deposits and other IP costs.
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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