Hi all,
There has been a bit of discussion on this however I just want to clarify for tax treatment.
I am looking to purchase another IP soon and have refinanced my current IP to unlock some equity so I can use these funds for a deposit.
Lets say I have $100k that I am drawing down. What I plan to do is draw these funds down and to have them sit in offset against the loan. No other personal funds will be deposited in offset nor will I have rent and other income in that account. The funds in offset will contain only the drawn down equity funds.
Once I see a property that fits my criteria I will then pay (directly from offset) to make the deposit (I have checked with the bank and this is possible). Given I have not contaminated the funds with personal savings, nor have washed them through a transaction account, I believe I am then able to claim the interest in my tax return.
I could actually choose to pay back the excess funds into the loan and redraw it, however I just wanted to confirm that using the offset in the above manner will be fine for tax purposes, as from my view makes no difference between a LOC or Redraw.
Cheers guys,
Dingus
There has been a bit of discussion on this however I just want to clarify for tax treatment.
I am looking to purchase another IP soon and have refinanced my current IP to unlock some equity so I can use these funds for a deposit.
Lets say I have $100k that I am drawing down. What I plan to do is draw these funds down and to have them sit in offset against the loan. No other personal funds will be deposited in offset nor will I have rent and other income in that account. The funds in offset will contain only the drawn down equity funds.
Once I see a property that fits my criteria I will then pay (directly from offset) to make the deposit (I have checked with the bank and this is possible). Given I have not contaminated the funds with personal savings, nor have washed them through a transaction account, I believe I am then able to claim the interest in my tax return.
I could actually choose to pay back the excess funds into the loan and redraw it, however I just wanted to confirm that using the offset in the above manner will be fine for tax purposes, as from my view makes no difference between a LOC or Redraw.
Cheers guys,
Dingus