Tenant says she cant afford $10 increase

[tess85]

Thanks Rixter, that confirmed what I was thinking! PM has always taken the fees out automatically but I guess you really want to maximise the tax deductible loan or LOC and minimise the non tax deductible one (PPOR, for instance) - that is what we are doing now, delving into the LOC world for the 1st time but don't know why I didn't do it earlier...!

I assume your would claim the interst on that Investment LOC. Is this ok with ATO? Isn't it kind of interest on interest?

Interest is an allowable deduction, just don't go into the interest on interest territory which is when you pay the interest of the IP loan from the LOC, the ATO doesn't like that.

 

[devank]

Yes I claim the interest on my investment dedicated LOC's. It is an allowable deduction how its structured.

Are you saying that you pay the morgage loan interest (wrongly used the word 'insurance' before) from the investment LOC and then claim the whole interest charge by LOC?
I thought that is a no no. May be the 'how its structured' is the key.

 

[devank]

Interest is an allowable deduction, just don't go into the interest on interest territory which is when you pay the interest of the IP loan from the LOC, the ATO doesn't like that.

That is what I thought... then how is paying interest of the IP loan from the LOC is different to paying PM fees from the LOC?

Sorry Alex... for hijacking the thread.

 

[Rixter]

Thanks Rixter, that confirmed what I was thinking! PM has always taken the fees out automatically but I guess you really want to maximise the tax deductible loan or LOC and minimise the non tax deductible one (PPOR, for instance) - that is what we are doing now, delving into the LOC world for the 1st time but don't know why I didn't do it earlier...!

Yep. Its all about how you move your fund around.

Interest is an allowable deduction, just don't go into the interest on interest territory which is when you pay the interest of the IP loan from the LOC, the ATO doesn't like that.

You can pay the interest on an IP loan from an investment dedicated LOC.

 

[Rixter]

Are you saying that you pay the morgage loan insurance from the investment LOC and then claim the whole interest charge by LOC?
I thought that is a no no. May be the 'how its structured' is the key.

I've never paid LMI, but I pay other IP expenses (including IP loan interest) from Investment dedicated LOC's and claim the interest.

 

[Alex P Keaton]

I too also increasing rents on a couple of IP's here in Perth $30 a week... $380 in Queens Park & $390 in Cannington. Thats a yield of 14.4% & 16.4% respectively. Both 3 bed villa's

wow!



......

 

[Alex P Keaton]

Cannington PM just phoned to advise tenant is not renewing lease in August. PM reckons instead of the $30 week increase offer to existing tenant they say I could get $50-$60 week increase to a new tenant. - takes it to $410-$420 p/w.

oh cool. haha

 

[Alex P Keaton]

That is what I thought... then how is paying interest of the IP loan from the LOC is different to paying PM fees from the LOC?

Sorry Alex... for hijacking the thread.

thats ok. I dont mind!

 

[dan c]

That is what I thought... then how is paying interest of the IP loan from the LOC is different to paying PM fees from the LOC?

It's not different. Each is an allowable deduction.

It only can become an issue if the rent is used to pay down other, non-deductible debts. If the rent is going into the LOC, there is no problem paying deductible expenses from the LOC too.

 

[CHAOS]

So can I take out a LOC using equity in IP #1 to pay for ip#2's interest and expenses while the rental income goes into my offset account
then
can I take out a LOC using equity in IP #2 to pay for IP 1's interest and expenses? while the rental income goes into my offset account?

Is this an acceptable structure? In 3 years time when offset = remaining loan on PPOR then I can chanel the rent back into the IP LOC accounts.

One legitamite reason would be only one income earner atm and cost of raising dependents so can't afford to pay IPs until second income earner returns to work. (The by product is non-deductabe debt is reduced)

 

[redwing]

3 weeks rent for a letting fee? Glad i don't pay that...
1 week for me!

same-same, thought most WA PM's push for 2 weeks with the tenant now off the hook for 1 week