How can I use my LOC low rate to my advantage?

So, I have the following loans:

- Line of Credit 2.85% - Limit $250k with $100k available
- IP Loan 3.14% fully offset by $220k in savings
- IP Loan 3.27% with offset of $0 savings - Just got this loan, so could move the offset money over here as it has a higher rate.

Is there ANY way I can transfer money from the LOC to the higher rate accounts WITHOUT mucking up the 'investment purpose' rule?

Thank you.

 

Yes. paying one loan with another is just a refinance. You could redraw $100k from the LOC and pay down the 3.27% loan and the interest would still be deductible on the $100k if it was on the 3.27%.

I have a private binding ruling on such a strategy.

But there are some issues to consider if you were to later redraw and pay back into $250k loan

Get tax advice before implementing, from a tax lawyer or tax agent.

 

Hi Terry,

Does it have to go into the actual loan and not the offset?

Thanks

 

In the ruling I have the ATO indicated that putting it into the offset was ok. But I suspect they are wrong on this.