I heard this in passing and wanted to throw it out there.
- Buy IP, take out $100k loan.
- Claim all interest on $100k loan
- Set up offset account against it
- Deposit $40k into offset account
- Actual interest charged is on $60k loaned
- Continue to claim $100k loan
For this to work, you will need to have paperwork showing that the interest charged is on $100k which offset accounts usually do. The effect of the offset is a credit for interest saved resulting in only a debit of actual interest charged. The story goes that the interest charged is on full $100k notwithstanding that you only pay interest on $60k. The interest "ïncome" received or offset using the $40k is not assessable as it is not technically received. Sounds too good to be true but apparently a few RMs are spruiking this "loophole". Wouldn't want to be the guinea pig to put a private ruling in through.
- Buy IP, take out $100k loan.
- Claim all interest on $100k loan
- Set up offset account against it
- Deposit $40k into offset account
- Actual interest charged is on $60k loaned
- Continue to claim $100k loan
For this to work, you will need to have paperwork showing that the interest charged is on $100k which offset accounts usually do. The effect of the offset is a credit for interest saved resulting in only a debit of actual interest charged. The story goes that the interest charged is on full $100k notwithstanding that you only pay interest on $60k. The interest "ïncome" received or offset using the $40k is not assessable as it is not technically received. Sounds too good to be true but apparently a few RMs are spruiking this "loophole". Wouldn't want to be the guinea pig to put a private ruling in through.