Debt recycling ...used loan split.

Discussion in 'Investment Strategy' started by hammer, 28th Feb, 2020.

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  1. hammer

    hammer Well-Known Member

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    Howdy. I have a small loan that I made out of converted equity on my PPOR. The original idea was to use this for debt recycling but I had to use it for other things (death in the family etc).

    Anyway I've got enough cash now where I can top the offset for this split up. I.e 0 percent lvr.

    My question is, can I now use the topped up offset in the split for debt recycling or have I blown it?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    What do you mean by topped up offset?
     
  3. hammer

    hammer Well-Known Member

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    Sorry Terry, I wasn't very clear...

    I accessed 16k of equity on my property. Converted that equity to one 16k loan split and one 16k offset.

    The plan was to spend the offset on DR ( shares)

    Life happened and I had to use the 16k for other things.

    Have since saved money and now the 16k offset is full again.

    Can I use that 16k for DR now?
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    See my tax tip 1. Sounds like you have borrowed money and parked it in an offset. You would need to pay the loan down and redraw to invest to fix this. Seek tax advice
     
    craigc and MangoMadness like this.

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