hi all.
I’m currently an owner occupier in a unit. my circumstances have changed dramatically and will be moving out. I would like to turn it into an investment property as I sold my last one and earn a decent wage so I need something tax wise. firstly, it’s a redraw account and I’m well aware I should have originally set it up as an offset account. I paid 410k for the unit and have paid it down to 275k with 88k redraw available. I have never redrawn any funds before. my understanding is that I can only redraw the 88k if it is for another investment property so that I’ll have the full tax deductions on the unit at 363k? obviously I don’t want to leave it at 275k because I want the max claims on interest possible. is it too late to change to an offset account without it being ‘contaminated’ from the redraw? keep in mind I’m not buying another ppor anytime soon and im also sceptical on investing in more investment propertys at this time but may eventually down the track.
Please, I’m keen to hear some options for my situation.
thankyouAny removal of funds from redraw will be new borrowings and deductibility will depend on how those funds are used.
You can’t do what you are proposing. But you may be able to borrow to pay for rates, strata etc associate with the property.
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 Zac,
By way of introduction, I am also a participant in this website and am here to learn about Property Investing and wealth creation in general. I am interested in your comment:
I’m not buying another ppor anytime soon and im also sceptical on investing in more investment propertys at this time but may eventually down the track.
So if not property what are your options? I am not trying to challenge, just wondering what and why. I am also thinking, and below are my thoughts:
1. Equities? It’s currently going downhill and nobody knows whether it’ll be another GFC. The only way, I think, is to analyse each company’s financial statement and predict their futures. Do you (I) have time to do this? The skill required is not just accounting, you see. It is also understanding about the particular industry(ies) and macro economics trend, etc. Once bought, equities also need constant monitoring to decide when to get out.
2. One of the safest buy where you (I) can buy and forget is ETF (Exchange Traded Funds) but there will be no advantage such as ownership of shares, tax franking credit, etc. And it is only tracking the market performance.
3. Our super is predominantly invested in equities and these are managed by professional fund managers. Maybe easier to just top up more super? But then again, no tax credit.
4. Investing in Bonds? Not save, currently volatile market as well. And even government bonds are no longer save heavens. The analysis require even more research and skills. Bonds are also called ‘informal banking’ because investors are essentially lending to companies (or governments) directly and without the due diligence and controls Banks usually apply when lending to corporates. I mean, Banks usually ask for collateral. If you buy Bonds, you are lending them without collateral.
These days, there is not a lot of attractive investment venues. Though Warren Buffet always says buy when the market is scared.
Any thoughts? Or rather, any other ideas on where to invest?
Cattleya
Here to learn the ropes of property investing and hopefully help others along the way.Cattleya
Here to learn the ropes of property investing & share knowledge, not trying to sell anything at all.
Redraw at your own peril as the entire loan will then be contaminated and interest cannot be claimed.
Seek advice before doing anything.
Cheers
Yours in Finance
0-40 Properties in a decade. Email me for a copy of my API interview.Richard Taylor | Australia's leading private lender
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