Should I 100% offset my IP loan?

[Maidenvain]

Hi Folks

I am wanting to buy a PPOR and as i cant find what i like yet, should I 100% offset my IP loan.

I currently have about 1/2 offsetting. The other 1/2 in another country but the exchange rates is so darn good i want to bring it here and capitalise on that. If its here, i will more 100% offset and have savings leftover to invest.

This is until i find a PPOR.

Does this sound like a good plan, and is it ok from a tax perspective to offset 100% then offset 0?

Thanks

 

[Peter_Tersteeg]

Unless you've got something better to do with the money, offset as much as you can and then move the money to a PPOR offset when you buy your home.

Better to pay a little tax on the positive gearing profits, then to get a tax deduction on negative gearing losses.

 

[Juliana Ardila]

Hi Folks

I am wanting to buy a PPOR and as i cant find what i like yet, should I 100% offset my IP loan.

I currently have about 1/2 offsetting. The other 1/2 in another country but the exchange rates is so darn good i want to bring it here and capitalise on that. If its here, i will more 100% offset and have savings leftover to invest.

This is until i find a PPOR.

Does this sound like a good plan, and is it ok from a tax perspective to offset 100% then offset 0?

Thanks

Hi Maidenvain

If you have a 100% offset facility and bring the money over to offset your loan temporarily that should be fine as you will save money on interest. If you latter buy your PPOR and use these funds, that is completely fine. The interest you pay on the IP loan will be tax deductible once you start paying it again.

I am sure you already know this but do not put the money directly into the loan because if you take it out for a private purchase the interest on that portion will not be tax deductible.

Another idea is. Pay for your PPOR cash and borrow against it to buy more IP. In that way the loan against your PPOR will also be tax deductible.

I hope this helps

 

[Redom]

Unless you've got something better to do with the money

This. Assuming your negatively geared, you'll only be earning ~3% on these funds sitting in your IP offset after tax - so you may be able to find better use for the cash (e.g stocks, managed funds, etc etc) while saving for your PPOR.

Cheers,
Redom

 

[Jamie M]

Agree with the general consensus - park it in the offset until you need to use it. Seems like the logical option.

Cheers

Jamie

 

[albanga]

I got finch at $19 most runs in the World Cup if your looking for a higher return than offsetting your loan

 

[Redom]

I got finch at $19 most runs in the World Cup if your looking for a higher return than offsetting your loan

Haha bold bet.

 

[Terry_w]

Hi Folks

I am wanting to buy a PPOR and as i cant find what i like yet, should I 100% offset my IP loan.

I currently have about 1/2 offsetting. The other 1/2 in another country but the exchange rates is so darn good i want to bring it here and capitalise on that. If its here, i will more 100% offset and have savings leftover to invest.

This is until i find a PPOR.

Does this sound like a good plan, and is it ok from a tax perspective to offset 100% then offset 0?

Thanks

This looks like a simple question, but it is actually very complex.

Have you considered
1. estate planning
2. asset protection
3. income tax
4. exchange rates = yes
5. laws of the other jurisdiction


impossible to answer without making some assumptions.

 

[Maidenvain]

Hi Terry
I have considered those things as much as my knowledge can let me based on my current situation. When I have enough cash to pay off my mortgage in the current situation, I'm pretty comfortable. And the dog gets everything (no kids - ever).

I need to meet with someone to consider these things going forward.


All such great advice, thank you all!

 

[albanga]

Haha bold bet.

Not off to a bad start