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How to un-mix two monies (each belonging to diff invest. prop.)

Discussion in 'Accounting & Tax' started by Ravi, 9th May, 2016.

  1. Ravi

    Ravi Active Member

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    Hi,

    Last week when my investment land(land 2) settled, the bank deducted settlement fee ($350) from an offset account which was offsetting to a different investment land (land 1) loan. As a result, offset account has transaction which belong to land 2 as well as land 1.

    Scenario in detail:

    Initially
    Land 1 loan = $343k
    land 1 offset bal= $78,350 (hence daily interest is calculated on 343,000 - 78,350= 264,650)


    After land 2 settles last week:
    Land 2 loan = $345k

    Land 1 offset = $78,350 - $350 = $78k (hence daily interest is calculated on 343,000 - 78,350= 265,000)

    As you can see money is withdrawn from land 1 offset and used for a expenses other than that of land 1.


    Question: Is this a problem? If yes, how to solve? Can I just transfer $350 from personal saving account into land 1 offset account? But hen how to calculate and sort out 1 week interest?

    Thanks for help.

    -Ravi
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    legallyblonde likes this.
  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    As long as both are deductible, I wouldn't worry about it too much
     
  4. Bullion Baron

    Bullion Baron Well-Known Member

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    I wouldn't have thought money coming out of any offset account would mix the loan?
     
    Last edited: 9th May, 2016
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You're right BB.

    I took the op to mean he had borrowed money in the offset, if this is not the case then no issue.
    Tax Tip 82: Taking money from an offset account on an IP and Claiming Interest

    If there was borrowed money, then it would be just be a matter of apportioning the interest - about 99% would be deductible.
     
  6. Ravi

    Ravi Active Member

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    Thanks guys for quick response.
    @Terry_w The money in Land 1 offset($78,350) is 100% borrowed money (it's equity from land 1).
    Reverse to what? Should I ask them to withdraw exact amount ($350) from my personal saving account and put in land 1 offset? I can do it myself using online banking. How about 1 week interest ? Can that be adjusted during tax time? or I have to take care of it now? ($350 for 1 week @4.5% = 30c).

    If it is not a huge issue I can leave it as it is now and apportion interest calculation during tax time.
    Also, land 1 is joint name while land 2 is single title. Would that make any difference?
     
  7. legallyblonde

    legallyblonde Well-Known Member

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    My bank made a mistake when I refinanced IP1.. Thankfully they worked their magic and sorted everything out correctly!
     
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  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You can ask the lender to reverse the transaction so that it never happened. This is the ideal solution - it is like someone putting money into the wrong account. They don't simply take it out, but reverse it.
     
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  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Just think of this as a LOC and you have borrowed $350 for a private expense. You cannot simply pay back $350 as it will come off all portions of the loan. But you could apportion the loan by working out the %. 350/78350 = 0.44% of it won't be deductible. So just claim 99.56% of the interest.
     
    Ravi likes this.
  10. Ravi

    Ravi Active Member

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