Where to put cash?

[ben73]

Hello Everyone.
Great forum. I have been reading for some time and have learnt quite a lot. Now I find myself in a position where I don't know what is best for me to do, so I have a question.

I am 35. No debt on my PPOR. Have 2 IP's totalling about $1 -$1.1m with debt of $800k on the pair.

I have ~$200k cash in the bank that I pulled from shares 6 or so months ago. It was earning reasonable interest till the end of last month, but now I am unsure what to do with it. The plan is to put it back into the sharemarket when I think its safe to do so.

Ideally I'd like to have it earning interest and offsetting the interset on one of my IP's. This would reduce my monthly outlay and make that interest earnt tax free (kinda)... but my bank doesn't allow me to offset an LOC accounts.

Does any bank allow this??



Leaving it the bank earning ~4.5% and paying tax on it is not appealing.

I understand I can't pop it into the LOC account to reduce monthly payments and take it out later and continue to claim all the interest on the full debt again..

So what to do? Any bright Ideas?

 

[belleran]

HI Ben, This article from the Business Spectator today may help
http://www.thebull.com.au/articles_detail.php?id=2114

 

[csc]

i dumped a substancial amount into this just a few days ago: $750k plus.

Suncorp-Metway CPS

higher risk than normal bank deposits without a doubt but worth it in the current market.

ive played the asx for years so the risk with this is fairly average..ill sleep at night!

good luck..

 

[greysuit]

Ben,

If you plan on using the funds for shares again later then the interest will likely be deductible when you withdraw it for that purpose.

Cheers.

 

[ben73]

Ben,

If you plan on using the funds for shares again later then the interest will likely be deductible when you withdraw it for that purpose.

Cheers.

As obvious as that seems, I hadn't considered that as an option.

So if I dump some cash into one of my IP LOC's and reduce the loan (for example) from $400k to $300k for a while, when I take the cash back, as long as I use if for a deductible type investment, I can begin claiming interest on the whole $400k loan again?

 

[greysuit]

Ben,

Yes, but it can get messy; especially if you'll be trading instead of holding those new shares. The interest on that $100k withdrawal will be deductible against the shares, not the property, so will be accounted for a little differently.

Bottom line though is yes, the full $400k could be deductible in that scenario.

Cheers.

 

[see_change]

Why not change a loan into an account you can offset .

Have you looked at what the swtiching costs are ?

Cliff

 

[AUSPROP...]

you are probably in a good position to stick $100k of gold bullion under your bed. some guys reckon you will be able to buy a couple of houses with that in the coming years.