All Topics / Legal & Accounting / Prepaid interest
I am thinking of prepaying interest on my investment loan to reduce tax for 2012-13 as may have a lower taxable income next financial year. I have a lump sum of money in offset account,which would cover the prepaid interest payment, but would like to preserve this possibly going to buy a PPOR in the near future. Do you think the tax department would have a problem with borrowing money to pay the prepaid interest (e.g. from an unused line of credit account that I have in place) or via redraw facility from the investment loan – to my mind, both these options would involve compounding interest, which I understand is an "iffy" area in terms of claiming tax deduction if the main reason is to reduce tax. Prepaying the interest also allows me to take advantage of a discounted rate, however (4.86%) for 1 year fixed with CBA. Any ideas or thoughts on this arrangement, or would I be safer to pay the interest amount with money from the offset account? Thanks w8up
It all depends on your situation and how you structure it. You should seek tax advice.
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 Terry, I already asked my accountant, but he was a bit vague with his answer, and I got the impression that he wasn't really too sure, hence me posting on the forum. I might have to try to pin him down on the answer. Cheers
Its not a simple ues or no answer. Ask him for some formal written advice and see what he says.
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
Hi w8up
where are you located? Sounds like you may benefit from speaking with another accountant.
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]
Hi Jamie, I'm in Adelaide
From memory, I think Dan who has a simpsons character avatar is an accountant in your neck of the woods. Always a good contributor so would be worthwhile getting in touch with.
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:From memory, I think Dan who has a simpsons character avatar is an accountant in your neck of the woods. Always a good contributor so would be worthwhile getting in touch with.Cheers
Jamie
That character is “Disco Stu”!
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
You must be logged in to reply to this topic. If you don't have an account, you can register here.