-ve gearing and an offset account...

Hi folks,

If I had a negatively geared property which did well for tax purposes, would having an offset saving account be counterproductive?

A negatively geared strategy encourages you to keep the mortgage interest, but having an offset account (eg MISA) would reduce that interest, hence you get less money back from the taxman...

Is my thinking right on this?
 
Yes but ,,,,,,,,

Depends

If you have PPOR, park that cash in an offset against that PPOR

if you dont have a PPOR, can you use the cash to make better rtns than the net savings in interest. if not, then

Remembering that a bigger tax chq isnt always better

ta
rolf
 
Doesn't make much sense to me that you want to maximise your mortgage interest unless, as Rolf says, there's a smarter place to use the money. I can find better uses for my $1 than paying interest in order to get $0.485 back from the ATO.
 
It's the eternal question...maximise tax loss vs. keeping cash in your pocket to start with.

I personally would always head towards making a property cf+, UNLESS your cash flow allows another purchase.
 
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