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I my opinion, Thats why the money that goes into the offset must be rent/salary/dividend income rather than borrowed. Borrowed money must be used to pay business related expenses as I see it. See Welshmans attached PDF flow chart. MJK

Ziggy, The annual interest rate of 20K is being generated from your PPOR is it not? I dont think you can borrow to pay that bill as it is not a business expense. The idea needs to revolve around borrowing to pay IP running costs. Maybe I'm not understanding your point clearly enough. Its...

If you pay the LOC from the offset that is offsetting your PPOR you are losing the whole benifit of minimising personal debt? MJK:D

Thats what I have set up now also. MJK:D

HI BV, If your still reading this...why would you do what you've suggested at point 2? I would have thought the whole purpose was to capitalise something somewhere? MJK:D

I dont think these questins where answered. I for one would really like to know peoples thoughts. MJK

It seems most agree that business expenses and interest can be paid by an external source be it LOC, or another loan and the interest on the LOC can be capitalised within its limit. This reduces the need to fund business expenses from income. So the question is.....can all business income...

Yes, that as I see it and yes I claim interest and yes in the future I will direct dividends to lifestyle but at the moment I reinvest. My accountant who is very conservative has always said borrowings for shares can be capitalised. MJK:D

Damon, Curiosly we havn't had an answer. I hope my question was clear? :confused: For your information Daman, the way I get around this is to have a Margin loan with Managed funds, A Margin loan is designed to capitalise interest till the cows come home if required! You can also use...

Corsa, While using an LOC account to fund an investment expenses account or loan account...we are saying the LOC interest is deductable. My question is.. are regular repayments required to pay the LOC interest or is this interest able to accrue and compound without reduction. Interest on...