Going from redraw to offset, tax question

[Qinau]

Hi all,

Yet another redraw/offset/tax question.

When I purchased my first IP late last year I decided just to take a basic loan product with redraw, which I have since been paying extra funds into. I would now like to setup an offset account and direct the extra funds there instead. I know it would have been better to do this initially but...

If I redraw my additional funds from the current loan agreement and put it straight into the offset account for the new loan agreement will I then have any tax issues claiming all the interest? I'm not redrawing to use it for personal expenses, but I'm not sure if just putting it into an offset account counts as an investment purpose.

The extra funds are ~10% of the loan, perhaps if I change to an offset now I could only claim 90% of the interest as a deduction. I probably need to visit the accountant but would appreciate any thoughts.

Cheers

 

[Rolf Latham]

Hiya

The overall interest charged will be the same.................

Where you will get into strife is if you USE the money now in the offset for personal purposes OR you use that offset as a transaction account, because it will have mixed funds in it


ta
rolf

 

[Qinau]

The overall interest charged will be the same.................

Where you will get into strife is if you USE the money now in the offset for personal purposes OR you use that offset as a transaction account, because it will have mixed funds in it

Thanks Rolf, so only if I use it...

I'm currently with the CBA and their MISA account doesn't appear flexible enough to use as a transaction account anyway. However thinking about in those terms, I might be better to keep my excess funds as a redraw on a new agreement and then start the offset account from scratch.

Cheers