Our first IP

[Tilda]

Hi All,

We have finally settled on our very first IP, it is very exciting but daunting also

We currently have a PPOR which we have used some equity for the new IP and I was wondering where do people have their rent paid into? Apologies if this is in the wrong section or a silly question, but I am awaiting to meet up with the accountant and am required to fill in details on the real estate "owner instruction" form. We have an offset account with out PPOR which I was thinking we could have it paid into or should I set up another transaction account for the I only whereby income and expenses come out from?

Again, sorry for the silly question, I have tried searching for an answer, but may not have correctly used the search function.

Thanks again.

 

[Rixter]

Rents go into one my Investment LOC's and IP loans paid from the same investment LOC.

My investment financials & personal financials are kept completely separate for accountancy purposes.

If you have a ppor mortgage makes sense to stick all incomes into that to reduce the outstanding balance and interest payable.

When setting your financials up make sure you structure it such a way so as to keep deductible drawings & non deductible drawings separate or non contaminated for accountancy purposes.

 

[jameso]

put all income, rent included into the offset account! higher balance = less non deductible interest.

james

 

[perthguy]

put all income, rent included into the offset account! higher balance = less non deductible interest.

james

Same. Now my loan is fully offset.

 

[impala67]

We have finally settled on our very first IP, it is very exciting but daunting also

Congratulations and all the best.

 

[bez23]

Congratulations on your first IP!

Best way to do it is pay rent into offset and interest taken out from there. Then create another loan for other expenses (increasing deductible debt while reducing your PPoR non deductible debt).

That said, I am not doing this because I have multiple investment properties and it is kind of tedious to keep track of how much of the interests belong to each property. Could be easily done with 1-2 IP.

 

[Tilda]

Thank you for all the replies, greatly appreciated

 

[r3ckless]

Congrats!

I have it structured so i have a separate transaction/offset account set up solely for this particular ip. All rent goes into this account. And any outgpings eg strata/loan repayments come out. I always keep a $5k buffer in there which as mentioned before offsets interest. My personal accounts are kept separate. And my other ip has the same set up and is also kep completely separate. I also have the optipn to nickname my acxounts so i knoe which loan corresponds to which transaction/offset account

 

[somersoftfan]

Congratulations on your first IP!

Best way to do it is pay rent into offset and interest taken out from there. Then create another loan for other expenses (increasing deductible debt while reducing your PPoR non deductible debt).

That said, I am not doing this because I have multiple investment properties and it is kind of tedious to keep track of how much of the interests belong to each property. Could be easily done with 1-2 IP.

Can all expenses other than interest be taken out from LOC? Or just the ones that are capital in nature

 

[jingo]

Can all expenses other than interest be taken out from LOC? Or just the ones that are capital in nature

All investment property expenses can be taken from the LOC. The LOC can also be used to pay interest on investment loans.

 

[bez23]

Can all expenses other than interest be taken out from LOC? Or just the ones that are capital in nature

Any expense, just not interest as ATO doesn't like that. Best to seek tax advice from accountants like TerryW if you want anything more complex than that

 

[bez23]

All investment property expenses can be taken from the LOC. The LOC can also be used to pay interest on investment loans.

Not as of last 2012. ATO stopped interest on interest for the purpose of paying down PPoR faster.