Hi fellow investors.
I currently have multiple I.P,s( 4) and have a LOC attached to one of the properties. All of the properties are in my name and are not crossed.
I currently have all of my income and rents going into the LOC and then loans from the bank(CBA), and incidentals such as rates etc come out of the LOC, the remaining running costs I like to come out of my credit card so that I can earn a few points at the travel agent.My question is how do other investors “transact” so to speak with their I.P,s, I set it up this way for ease of operation,but these properties can now stand on their own, so I was thinking of putting all of the rents and my income into one of the offsets and continue to live off my credit card and swipe it once a month, or alternatively I can have the rents and outgoings go into each property offset, which is just marginally more complicated but with the ease of Bpay etc these days, not a real issue.
I look forward to how other investors with a few properties or more handle the more intricate day to day transactions.
Thanks
How do you pay the credit card? If you are paying it out of the LOC it is contaminated and you will have difficulty claiming interest. Say for example you were claiming the interest then pulled money out to buy a car then put it back in, that amount is now no longer deductible.
I have a personal account that wages go into. I transact all personal accounts through that. I don’t keep much money in it. I don’t have offsets ATM as my loans are all fixed. Once that ends I’ll get an offset to park extra cash.
I have a seperate account that all my rents go into and all IP payments go out of. I actually like that as it has gone from where I used to have to top it up to it now gaining money each month now that I’m CF+. :-)) It’s easy for the accountant also.
You don’t need an offest for every seperate property. That will mess with your head. You could just set one up. Or have one personal one and one IP one. But don’t mingle them. That’s where taxation nightmares begin. If you are ever auditted it’s good to have clear divisions.
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This reply was modified 10 years, 6 months ago by
Catalyst.
Catalyst,
My LOC of credit isn’t contaminated as I ensure its only used for investment purposes, I have my income go into another account and then distributed to the LOC, as you a are aware CBA don’t have a fully transactional offset account.
I called the bank today and they said that they would charge me $95 to set up a fully transactional offset, following up with “we have a special in place, and we can turn your current non offset account into a fully transactional account”, AHH love the banks!So I now have a fully transactional offset account linked to one of my I.P,s( my old PPOF) and will have rents and outgoings transact through this account, quite simple a simple process, I think.
We are currently renting interstate so this seems like the best way forward for us
CheersThe easiest and often best solution is to have one offset account set up against one loan. All income (salary and rent) goes in and all outgoings come out (loan repayments, etc). If you have a PPOR loan – the offset should be against it.
I’d use a credit card for expenses – one that earns points. Once a month I’d clear the credit card with money from the offset. By doing this, I’ve earned points on my credit card and saved some interest on my home loan.
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]
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This reply was modified 10 years, 6 months ago by
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