I'm just done reading the new hottest 100 edition of API and it was the best read I've had in quite a while from any of the big two investment mags.
The article on capitalising interest was of interest to me and got the brain ticking.
It is a story of an investor who has a few rentals with some good equity. He basically got a ruling from the ATO that all rental income and wages went direct to his home loan (PPOR) account and he capitalised equity to fund 100% of his rental properties shortfall. (Which I imagine would be quite a lot)
Apparently the capitalised interest was heavily offset by his savings and tax deductability of the interest bill.
The home loan was paid off within 7 years. I have no idea how big or small this principal and interest loan was unfortunately as it wasn't stated.
To me, this strikes me as tax evasion, but the ATO had ruled that it was not because rental income would one day catch up to the interest bill and become cash-flow positive.
I've heard this before but never thought anything of it as I'd never be game to try it and did not think anyone else would either.
I
Anyway, interesting
The article on capitalising interest was of interest to me and got the brain ticking.
It is a story of an investor who has a few rentals with some good equity. He basically got a ruling from the ATO that all rental income and wages went direct to his home loan (PPOR) account and he capitalised equity to fund 100% of his rental properties shortfall. (Which I imagine would be quite a lot)
Apparently the capitalised interest was heavily offset by his savings and tax deductability of the interest bill.
The home loan was paid off within 7 years. I have no idea how big or small this principal and interest loan was unfortunately as it wasn't stated.
To me, this strikes me as tax evasion, but the ATO had ruled that it was not because rental income would one day catch up to the interest bill and become cash-flow positive.
I've heard this before but never thought anything of it as I'd never be game to try it and did not think anyone else would either.
I
Anyway, interesting