Hello all,
I have set up a discretionary trust, with my wife and I as trustees, and have just settled on first IP. A loan (80% LVR) in both our names (as trustees for the trust) is secured against the IP. The balance of 20% came out of my investment LOC account (this LOC is in my name only). From recent threads, it appears that the interest attributable to this 20% IP cost is not deductible against my personal income, and that I will have to separate out this interest at year end for tax return purposes.
Is there a more appropriate way to finance the 20% balance IP cost, in terms of simplifying separation of deductible and non-deductible interest?. My wife and I also have a joint LOC (secured against PPOR) which we use for daily family expenses and to provide a buffer against no income periods. We could have paid the 20% balance out of this LOC, but we would still have the “problem” of separating the interest attributable to the IP from the interest attributable to personal expenditure. How do other people who use a discretionary trust structure manage payment of the balance 20% cost of an IP?
regards
Padraig
I have set up a discretionary trust, with my wife and I as trustees, and have just settled on first IP. A loan (80% LVR) in both our names (as trustees for the trust) is secured against the IP. The balance of 20% came out of my investment LOC account (this LOC is in my name only). From recent threads, it appears that the interest attributable to this 20% IP cost is not deductible against my personal income, and that I will have to separate out this interest at year end for tax return purposes.
Is there a more appropriate way to finance the 20% balance IP cost, in terms of simplifying separation of deductible and non-deductible interest?. My wife and I also have a joint LOC (secured against PPOR) which we use for daily family expenses and to provide a buffer against no income periods. We could have paid the 20% balance out of this LOC, but we would still have the “problem” of separating the interest attributable to the IP from the interest attributable to personal expenditure. How do other people who use a discretionary trust structure manage payment of the balance 20% cost of an IP?
regards
Padraig