loan with redraw or offset account

[tj22]

having a loan which you can make extra repayments and redraw from or having an offset account. etc say u had an extra 40-100k where is it best to put it offset or back into the loan? ideally wanting to then take it out later to use for a deposit for next ip.

i know the major con for having it in the loan is that if the property price drops you can't take it back out.
but pro for putting it into the loan is it'll become tax deductible when used for next ip deposit?


i want to have like a pros and cons list

Cheers,

 

[Jess Peletier]

You can have your cake and eat it too with this one - use offset, then when the time comes to buy the next IP, put the funds into the loan and split off then.

 

[Scott No Mates]

he property price drops you can't take it back out.
but pro for putting it into the loan is it'll become tax deductible when used for next ip deposit?


i want to have like a pros and cons list

Cheers,

Yes & no.If you're talking about your ppor redraw wouldn't be deductible unless it's a separate LOC whereas the offset wouldn't be deductible at all.

So structure is vital.

 

[tj22]

Yes & no.If you're talking about your ppor redraw wouldn't be deductible unless it's a separate LOC whereas the offset wouldn't be deductible at all.

So structure is vital.

sorry should have said the first property would be a ip

 

[Terry_w]

sorry should have said the first property would be a ip

Assuming no non deductible debt you would be better off to keep IO loan and save into an offset account. loan interest will be deductible whether you use the savings for a PPOR or another IP.