Paying IP expenses from LOC

I don't know one in Perth, but Michael @ House of Wealth in Melbourne is really helpful. I'm in Perth and I send everything to him. That said, I'm sure there are some great Perth based ones too, at the time I was in the sticks so Perth/Melbourne made no difference as I had to send everything anyways.

Yeh i suppose it doesnt really matter where you live in this day and age. Thanks, Jess and Coota9 for your input

KJB
 
I pay all our property portfolio expenses ( loan interest & all holding costs) via investment LOC's. I dont do it to pay down my PPOR though as there was a ATO case that ruled against it a few years back. All our after tax income goes direct into PPOR & all our investment income goes into our investment LOC's.

Do you also put any of your tax return back into your investment LOC to keep it down? Or did you at some earlier point?
 
Do you also put any of your tax return back into your investment LOC to keep it down? Or did you at some earlier point?

We used a Income Tax Withholding Variation to get our tax back each pay period, so we could get it working for us through out the year on further IP's. That went into our Investment LOC and wages into personal LOC.
 
Why not having a LOC for each IP. Then you don't have to record which payment is for which IP?

I think this approach only works for negative geared IP. No benefits to do this for positive geared in my opinion.
So can I say that: Keep those positive IP income/expense in/out from offset. But use LOC for negative IP
Correct me if I am wrong .



I have quite a few LOC's....but I only use one for for portfolio expenses including IP interest.
 
Why not having a LOC for each IP. Then you don't have to record which payment is for which IP?
I dont have to record which payment is for which IP within the LOC.. Total investment LOC interest is simply recorded under another section of the form within the tax return.

I think this approach only works for negative geared IP. No benefits to do this for positive geared in my opinion.
So can I say that: Keep those positive IP income/expense in/out from offset. But use LOC for negative IP
Correct me if I am wrong .

I prefer to keep things/systems simple... that includes financial structuring. As such I use LOC's over offset accounts as it's more stream line. There is no purpose to separate CF+ IP's into offsets and -ve into LOC's. Keep it Simple.
 
If you use multiple entity to buy IP for ex,one my name, one partners name, one joined name with partner. Then you need at least three loc. Right?

Regarding positive , this sound not useful if the entire portofolia are positive ? Right. You end up deposit money to loc.



I dont have to record which payment is for which IP within the LOC.. Total investment LOC interest is simply recorded under another section of the form within the tax return.



I prefer to keep things/systems simple... that includes financial structuring. As such I use LOC's over offset accounts as it's more stream line. There is no purpose to separate CF+ IP's into offsets and -ve into LOC's. Keep it Simple.
 
If you use multiple entity to buy IP for ex,one my name, one partners name, one joined name with partner. Then you need at least three loc. Right?

Yes of coarse, separate entities separate financial structures.

Regarding positive , this sound not useful if the entire portofolia are positive ? Right. You end up deposit money to loc.

Yes one can use funds from investment LOC to fund IP deposits and costs and any other IP related expenses. It's in material if one's portfolio is CF+, neutral or negative.
 
Let me rephrase my positive question.

Am I better off if using offset and new top up loan compared to loc if my portfolio is positive. Considering those offseted ppor debt. Also you have no interest to capitalise in loc.

Let's assume portofolia is always positive(I know it's not always true)

Thanks.

Yes of coarse, separate entities separate financial structures.



Yes one can use funds from investment LOC to fund IP deposits and costs and any other IP related expenses. It's in material if one's portfolio is CF+, neutral or negative.
 
Let me rephrase my positive question.

Am I better off if using offset and new top up loan compared to loc if my portfolio is positive. Considering those offseted ppor debt. Also you have no interest to capitalise in loc.

In your example they both do the same job..
 
Sorry maybe i didnt explain well. I only have one offset which linked to ppor. The positive cash flow in my offset can reduce non deductible interest. While positive cash flow in loc will do me no benefits.


In your example they both do the same job..
 
Sorry maybe i didnt explain well. I only have one offset which linked to ppor. The positive cash flow in my offset can reduce non deductible interest. While positive cash flow in loc will do me no benefits.

If you set up a LOC secured against ppor, then put the same positive cash flow into the LOC it will reduce the balance which in turn will reduce the interest.
 
Very good discussion.

It doesn't matter loc loan secured by ppor or IP, but the loan purpose. When loc loan is used to pay IP cost. The interest are deductible.

So if + geared, loc approach will reduce deductible interest. Offset will reduce non deductible interest which is better in my opinion.

I feel like looking for a finance advisor or broker job next time.




If you set up a LOC secured against ppor, then put the same positive cash flow into the LOC it will reduce the balance which in turn will reduce the interest.
 
Question on item 3

When u repay. Don't u have trouble to point the repay only to the property u sold?

As my accountant told me, all repay has to be proportioned as this is mixed loan.

U can't say my repay is for this only.

[
QUOTE=Terry_w;1210898]1. yes
2. yes
3. Repay the loan relating to the sold property, not the costs.[/QUOTE]
 
Question on item 3

When u repay. Don't u have trouble to point the repay only to the property u sold?

As my accountant told me, all repay has to be proportioned as this is mixed loan.

U can't say my repay is for this only.

1. yes
2. yes
3. Repay the loan relating to the sold property, not the costs.

Yes you will. You really need to split the loans before repaying a mixed loan otherwise all the deposit will come off all portions of the loan.
 
Thank you.
u either split when u sell/refinance .or split when IP can support it's own loc. One loc per IP is alternative to one big portofolia loc. On that point, may i ask why u prefer one big loc to small loc per IP?

Yes you will. You really need to split the loans before repaying a mixed loan otherwise all the deposit will come off all portions of the loan.
 
Thank you.
u either split when u sell/refinance .or split when IP can support it's own loc. One loc per IP is alternative to one big portofolia loc. On that point, may i ask why u prefer one big loc to small loc per IP?

I would prefer separate loans for each property if possible. I.e. one main loan secured on the property and then perhaps a LOC secured on the main residence. If a separate IP is purchased then ideally you would want a separate LOC to be used only for this property.

Later as the IPs growth each LOC can be refinanced back into the main loan secured by that IP and the LOC then used for the next one.
 
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