Lump sum, what to do?

[ronnieandkylie]

We have various propertys that are negatively geared and we have inherited some money.
Would we be best served by paying this extra cash into our loans to get it down, therefore allowing us to buy more properties with the equity?

 

[yo yo ma]

Don't pay the loans down... Have you got your own place?
Best put into an offset account until you decide what to do with it.
See this post for some more info.
Steve

 

[ronnieandkylie]

Thanks yo yo ma.

But i still dont understand, wouldnt the money be better to get the loan down than sitting in an account earning interest??

 

[yo yo ma]

You don't earn interest in an offset account... it just reduces the loan amount. Read the link for a better explaination. It works out exactly the same now if you use an offset account or put if off the loan; the benefits come later.

If you put the money off the loan now, you reduce your tax deductions in the future. If you keep it in an offset account, you can take it out at a later date and keep the original loan as a tax deduction.

Please ask more q's if I am not explaining it properly.