have you heard of this???

[goldie]

i posted this message elsewhere on the forum and realised that i may not have been in the best place!! forgive me if i am wrong.

hi all

i have been informed of a scheme that is being used where you buy 2 properties - one to live in, one to rent. lender sets up 2 loans. you pay off the one you live in by depositing the interest due to both loans just off the own home loan. this increases the amount of interest due every month but makes it ALL tax deductible. you pay off the home you live in very quickly.

users of this method reportedly never pay more than they actually borrowed because as the loan balance increases with interest, the home loan balance decreases.

apparently the ato took it to court last year and lost.

has anyone heard of this before????? comments???? i am most confused by this approach and somewhat concered about the legality of the scheme.

cheers

goldie

 

[Jamie]

Hi goldie,

There has been much discussion about this in the past 6 months or so, and different people have differing views as to the possible outcomes of the legislation.

Do a search using "Split loans" as the paramater and it should give you the threads for previous discussions on the topic, including some great advice from Dale, our resident accountant.

Best wishes

Jamie

 

[Tibor]

Goldie,

I would be a bit cautious with it. There are companies who are offering this kind of loan, but there is a case (I think it is at High Court level) which the ATO initiated to disallow the deduction for the capitalised interest.

I would wait until the High Court makes a decision. I am sure you will hear about it as soon as it happens as it is a great news item (irrespective of the actual outcome) and for "smart" financiers a great opportunity (if eventuates).

I think Dale already had made some comments about it.

Tibor