Threw in cash for deposit - top up wasn't ready in time. Can I "swap" now?

[Richard Feynman]

I am expecting a resounding "no" but I've gotta ask. Hopefully a genius/experienced finance/tax expert can provide certainty.

Situation:

• I'd made a request to top up a loan, the balance of which was to be the 10% deposit for my next purchase.
• A place popped up before the above loan was funded. I made an unconditional offer, which was accepted and had to throw in cash for (most of) the deposit.
• The top up will be funded before settlement.

Is there any way at all that I can "swap" out the funds so I can claim interest on the amount of cash I threw in out of my pocket from this point on?

If it were possible, I'd move the top up funds out of offset (against itself) and into my PPOR offset account (where the cash I contributed was sitting), essentially turning it back into cash. I'd then be paying deductible interest on what I paid for the deposit.

Hit me.

 

[D.T.]

Game show Buzzer

 

[coastymike]

Computer says no.

 

[baby blue eyes]

A deposit bond may have been better?

 

[Richard Feynman]

Absolutely right bbe, but I didn't want to take a chance on this one so I went unconditional with a cheque for 10% to provide absolute certainty to the vendor and agent.

It was a pounce immediately (in a smoking hot market), or miss it deal. We'd exchanged contracts a few hours after the first open; itself a few days after being listed.

I scored the place under market value, by an amount greater than the amount of cash I contributed, so all's well, but I'm always keen to optimise my situation.

Folk, thanks for affirming my belief:

 

[Jamie M]

Can't hurt to ask if the cash deposit can be rebated back to you at settlement. Just explain to them the deductibility issue - can't hurt to try.

Cheers

Jamie

 

[Corey Batt]

I've known agents to rebate the deposit paid, or 'swap' the funds prior to settlement.

 

[Richard Feynman]

Ding!

My ears have pricked up now.

Cjay, Jamie, thank you!

What'd the process be? Have my conveyancer put a request through for them to write me a cheque for the amount I contributed as cash (to receive on settlement), meanwhile, we'd adjust the settlement amount to include the extra funds they were rebating?

 

[DaveM]

If the top up is avaialble before settlement, the deposit should still be in the agents trust fund. You can ask to pay a new deposit and for them to disburse the original one back.

 

[Singo]

Talk to your settlement agent. Common sense says this can be done. Because the deposit is not yet actually paid to the seller. It is just sitting in a trust account. It gets paid on settlement. So something can be done.

 

[Jamie M]

Exactly what Singo and Dave said - the money is sitting in the REA's trust account. So it needs to be swapped around with you borrowed funds - or handed back to you at settlement.

The key is in the explanation - they need to know that your motivation is due to keeping the funds deductible and you're not some dodgy dude trying to rip them off.

Cheers

Jamie

 

[Terry_w]

If you had borrowed that money from someone else then it may be possible to refinance this loan with your top up. But you cannot reimburse yourself.

 

[wategos]

How's the ATO ever going to work that one out ? Just claim the top up funds were used for the deposit like everyone else does with their dodgy deductions and transfers and gets away with it.

 

[D.T.]

How's the ATO ever going to work that one out ? Just claim the top up funds were used for the deposit like everyone else does with their dodgy deductions and transfers and gets away with it.

As someone who has previously faced the ATO in court, I'd do everything possible to avoid having to go through that again.

 

[Mr. Fabulous]

Geez, when you said you put in 10% of your own funds, I didn't think you meant 10% of your body! Although one could argue that your hand (and part of your forearm) doesn't equal 10% of you.

But then I guess it could be said that finding out that your dad is basically the Hitler from long long ago in a galaxy far far away could be pretty scarring.

 

[Aaron_C]

How's the ATO ever going to work that one out ? Just claim the top up funds were used for the deposit like everyone else does with their dodgy deductions and transfers and gets away with it.

Some people think the ATO is going to really care about a tax deduction on 10k while the realists around know that the ATO has much bigger fish to fry.

 

[Richard Feynman]

Thanks again folks. I ****ing love this place.

I'll let you know how I go with this one.

 

[DavidMc]

Some people think the ATO is going to really care about a tax deduction on 10k while the realists around know that the ATO has much bigger fish to fry.

Absolutely... try starting with Google 'Singapore's' low taxed profits it makes on selling ads to Australian businesses.

 

[Richard Feynman]

So, the place settles monday and I've successfully organised through my conveyancer to swap out the funds at settlement.

Success.

Thanks to everyone who contributed to this thread. Your input was invaluable.

...and now I've got another chapter for my first book

 

[Corey Batt]

So, the place settles monday and I've successfully organised through my conveyancer to swap out the funds at settlement.

Success.

Thanks to everyone who contributed to this thread. Your input was invaluable.

...and now I've got another chapter for my first book

Good work Richard.