PPOR Offset Account
- Thread starter angela
- Start date
I don't know why it has never occured to me before
Well that's an extra $1500 a month that will help reduce our home loan.
Angela,
Is there a debt on your IP? If so, how will you be making the repayments if all your rent is going into your PPOR?
Did somebody say capitalising interest?
probably a stupid comment as I am largely ignorant on all this but couldn't you simply transfer enough to pay the IP repayments when needed but leave it in your offset account as long as possible to reduce interest on you PPOR ?
IMHO I don't see why you can't do this.
It's taxable income so you can do whatever you want with it.
cheers
You can nominate your offset account as the one from which repayments are debited.
Angela,
I presume you don't have structure?
Just be careful, as I can't legally do what you're suggesting as I have structure. My IP is in my structure so legally I can't pass funds out of the structure without realising the tax implications. This extends to mortgage offset. I have to have my rental income within my structure offseting the loans within the structure and can't direct the company's cash account to offset my personal PPOR debt.
So, NO, I can't use my rental income to offset my PPOR mortgage.
Of course, as soon as the money comes out of the structure legally, as distributed profits or loan repayments to me as the director, then I can do what I want with it, which typically means parking it in the mortgage offset account linked to my PPOR.
Cheers,
Michael.
I presume you don't have structure?
Just be careful, as I can't legally do what you're suggesting as I have structure. My IP is in my structure so legally I can't pass funds out of the structure without realising the tax implications. This extends to mortgage offset. I have to have my rental income within my structure offseting the loans within the structure and can't direct the company's cash account to offset my personal PPOR debt.
So, NO, I can't use my rental income to offset my PPOR mortgage.
Of course, as soon as the money comes out of the structure legally, as distributed profits or loan repayments to me as the director, then I can do what I want with it, which typically means parking it in the mortgage offset account linked to my PPOR.
Cheers,
Michael.
Payment period
Slighty different question but still on offset accounts, does the payment period make any difference to the overall interest you pay.
With a normal loan account, it is obvious that paying weekly would reduce the overall interest you pay. However, with an offset account, I would imagine that paying monthly would be better because you will have a longer period to which money in your account offsets the loan amount? Or am I misunderstanding offset accounts?
Slighty different question but still on offset accounts, does the payment period make any difference to the overall interest you pay.
With a normal loan account, it is obvious that paying weekly would reduce the overall interest you pay. However, with an offset account, I would imagine that paying monthly would be better because you will have a longer period to which money in your account offsets the loan amount? Or am I misunderstanding offset accounts?
With a normal loan account, it is obvious that paying weekly would reduce the overall interest you pay. However, with an offset account, I would imagine that paying monthly would be better because you will have a longer period to which money in your account offsets the loan amount? Or am I misunderstanding offset accounts?
If the offset account is linked to your PPOR loan then IMHO it's best to pay your IP interest monthly. If it is linked to your IP then it makes no difference as any money left in the account is offsetting the IP loan anyway.
Cheers
Yep,
Mines currently within a HDT and my accountant advises that he is uncomfortable with my company as trustee cash account offsetting my personal PPOR mortgage. He said I needed to redirect it to offset the IP mortgage held within the structure.
Theoretically I could calculate the interest saved on my PPOR interest and transact that as a loan repayment to me as director, but that's all a bit fiddly and might be missed and therefore expose me to an audit risk. Better to just keep it neatly inside the structure until I formally transact it out via a loan repayment or profit distribution.
Cheers,
Michael.
