I own a home in melbournes west and rent it out to friends for $1120 a month and my loan repayments are $1034 a month I'm now looking at investing my money in a business in about a year. I've now come in to a inheritance of about $100K and I was thinking of putting that on the mortgage and keep saving or would I make more money in putting it in a investment account? I don't even know what the going rate is at the moment for savings accounts so what would be the smarter thing to do to make more money?
DO NOT just put it on the house loan. If you need to take some out for personal spending it becomes non tax deductible and you then have a mixed loan which messes with your tax. Make sure your loan has an offset account, or change to one that has (NOT A REDRAW do not let the bank tell you it's the same thing IT IS NOT!!!- IMPORTANT!!!). Put the money in there and then you are free to take it out when you want and still maintain the tax benefits.
If you put it in a savings account you pay tax on it. So the above option is better.
Hi Catalyst.
What's the difference, how does that work ?
Cheers
thecrest
thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
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Don't put it in the loan as that will create tax problems. Deposit = repayment and withdrawal = new loan, so you could ruin deductibily of the interest once you withdraw the money.
A look at 100% offset accounts would be the way to go
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
Agree with what has been said.
Do Not pay it off your current mortgage …………..
Offset is the way to go.
Offset = flexibility
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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