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Balance Transfer for Offset account

Discussion in 'Property Finance' started by cheekykoon, 1st Sep, 2016.

  1. cheekykoon

    cheekykoon Well-Known Member

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    Hi, wondering if anyone would do this.

    Credit card offers 3% processing fees for 6 months 0% interest free repayment period.

    Say Take a balance transfer at processing fees of 3%, put it into offset account to offset interest on mortgage of 4.15%. Can the balance transfer processing fees be tax deductible?

    Would there be an overall savings? loss?
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Transferring from CC to offset is a cash advance and will be at your cc interest rate - 18%+
     
    Terry_w likes this.
  3. cheekykoon

    cheekykoon Well-Known Member

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    Hi Scott, during promotional period, it would only be a processing fee of 3% and 0% interest, normally for 6 months.
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    It would not be deductible as the purpose (putting funds in an offset) is not a deductible purpose.
     
  5. cheekykoon

    cheekykoon Well-Known Member

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    Technically Speaking...

    3% upfront fees plus repayment of interest free 1-3% outstanding fees, works out to be about 6-7% fees per annum, whilst offset, saved 2.075% per annum, nett borrowing cost is about 5% per annum.

    Wondering if this can be used for business expenses and for tax deduction?
     
  6. cheekykoon

    cheekykoon Well-Known Member

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    Thanks Jess, Well, if its not tax deductible, that leaves funds financing at about 5% per annum nett.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You would be borrowing to park in an offset. It could be deductible under limited circumstances - see my tax tip 1