"Borrowing Funds" from Personal LOC for Investing

[Joh]

Hi All,

I have just a quick question. Even though I am mainly about property investing, I want to put $10 into shares however I am waiting for my loan to be approved (I have pre-approval). Are their any tax implications if I took 10K out of my non deductible LOC for investing and just pay the 10K back in from my loan that I am waiting for?

Cheers,
Joh.

 

[Simon]

Yes there are

Big issues.

Best way to do it is to get the bank to issue you the LOC with subaccounts or splits (same thing). Use one purely for investing and the other for personal use.

Leave the Investing one to accumulate interest and pay any income you get into the personal one.

This will leave the deductible loan getting bigger and the personal one getting smaller. Overall the same position but more tax efficient.

Keep them totally seperate and you will have no problems.

Hope it makes sense.