Trading, Borrowed money, Tax deductions

Hi,

I know you can borrow against your home loan & then claim a tax deduction on the interest charged on the borrowed amount that is used to trade the share market. However, can you continue to claim a tax deduction on this borrowed amount if you were to put the exact same amount (proceeds from the sale of a property) into an offset account linked to your home loan and use the original borrowed money to continue trading ? :rolleyes:

all thoughts welcome.
 
You have 2 separate transactions:

1. You borrow on your home loan to invest in shares

2. You deposit from a different source other funds into an offset account

Provided the offset is not against the funds you borrowed for investing, interest on your borrowing will still be deductible. So you need to make sure you have a subaccount for your investment borrowings that the offset is not linked to
 
Of course, the offset amount reduces your interest expense on the funds used to trade.

Maybe more tax-effective if you offset a non-deductible debt ?

Cheers,

Rob
 
I have just sold an IP in which the proceeds could be used to fund my trading account. I could re pay the initial amount borrowed that has been used for trading and just use the remainder of the proceeds from the IP but that would'nt be tax deductible. Therefore I would prefer to still use the initial borrowed amount make my trading tax deductible whilst keeping funds in my offset to continue reducing the interest on my mortgage.

Surely this can be justifiable? :confused:

Is the ONLY loan against your property the investment loan ?

Cheers,

Rob

It's a fixed rate home loan which I borrowed an extra amount on top to use for trading

You have 2 separate transactions:

1. You borrow on your home loan to invest in shares

2. You deposit from a different source other funds into an offset account

Provided the offset is not against the funds you borrowed for investing, interest on your borrowing will still be deductible. So you need to make sure you have a subaccount for your investment borrowings that the offset is not linked to

This is what I have been thinking but was'nt aware it is called a 'subaccount'. Is this the correct term?
 
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