Is this the most effective strategy???

Hi all,

So, my partner and I are in the process of purchasing our 2nd investment property. We currently have no available equity, but, have managed to save enough for our deposit and costs which is currently sitting in our offset account again our OOP.

To ensure tax deductability I am planning on depositing our deposit and costs cash back into our home loan, and when required, redrawing it (for investment purposes) which will allow the interest to be claimed at tax time.

I think I have explained that terribly but hopefully you get the idea!

Does this all sound about right?

Thanks in advance for any thoughts!
 
The concept is right, but the most important thing is to make sure that you create a new loan split specifically for the IP costs. If you just draw out the funds your loan will be mixed use and you may not be able to claim deductions on the interest.
 
Hi all,

So, my partner and I are in the process of purchasing our 2nd investment property. We currently have no available equity, but, have managed to save enough for our deposit and costs which is currently sitting in our offset account again our OOP.

To ensure tax deductability I am planning on depositing our deposit and costs cash back into our home loan, and when required, redrawing it (for investment purposes) which will allow the interest to be claimed at tax time.

I think I have explained that terribly but hopefully you get the idea!

Does this all sound about right?

Thanks in advance for any thoughts!


Doesn't sound right to me. There are numerous tax experts that will reply, but sounds like you will contaminate your PPOR loan.
 
Does this all sound about right?

Yep - almost.

Ideally you would want to separate the 2 loans by paying down the loan and then setting up a new split.

If you dont do this you will need to apportion the interest - which is no big deal,, but any subsequent deposits will be reducing your tax deductible portion of the loan and costing you money, as well as making it difficult to work out. If your loan is PI this will be a pain in the bottom.
 
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