Offset account needed?

I have a home loan with a 5.2% variable rate and offset account. Basically, I am wondering is it necessary to have the offset account home loan for taxation purposes (as I claim tax deductions for the properties home loan interest expenses). I have heard it is is complex to not have an offset account as when you take money out of a redraw home loan account it makes things messy for taxation reasons.

However, a lot of the cheaper loans don't have an offset account and I'm looking to change to a home loan with just a redraw account. If I change to another loan with just a redraw and no offset account and regularly have money coming in and out of the redraw account, will this create a mess come taxation time?

Thanks in advance for your help.
 
If it is an investment property, you definitely don't want to be using the redraw facility. It will 'contaminate' the loan in the eyes of the ATO.

Search this forum for redraw vs offset and there are heaps of articles to guide/inform you.

Get an offset facility instead!
 
Redraw = new borrowings. Therefore, deductibility of the redrawn funds will be determined by the purpose of the redraw.

You won't have the same issue with an offset account.

Without knowing the finer details of your situation - it's usually a good idea to continue to utilise an offset rather than a redraw.

If you're concerned about the rate - depending on the loan size you could probably do better than what you've currently got.

Cheers

Jamie
 
why do you want to get rid of the offset? to save 0.1% IR?
it works the same way as redraw anyway but none of the consequences
 
I have a home loan with a 5.2% variable rate and offset account. Basically, I am wondering is it necessary to have the offset account home loan for taxation purposes (as I claim tax deductions for the properties home loan interest expenses). I have heard it is is complex to not have an offset account as when you take money out of a redraw home loan account it makes things messy for taxation reasons.

However, a lot of the cheaper loans don't have an offset account and I'm looking to change to a home loan with just a redraw account. If I change to another loan with just a redraw and no offset account and regularly have money coming in and out of the redraw account, will this create a mess come taxation time?

Thanks in advance for your help.

you don't need an offset, but you should avoid using a redraw facility on a loan as everytime you redraw you will be mixing your loan up.
 
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