Increased loan- what to do with cash

Discussion in 'Loans & Mortgage Brokers' started by Jamesaurus, 13th Oct, 2020.

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  1. Jamesaurus

    Jamesaurus Well-Known Member

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    So I have increased the IO split of my PPOR loan:

    80k IO split, has an offset account 80k in it full offsetting it.

    There is a separate fixed loan on this property.


    The 80k split now is saying "50k available" as of today. Is it better for tax purposes if I try to transfer this to the offset? (I plan to use the funds for my next IP deposit next year)
     
  2. Jamesaurus

    Jamesaurus Well-Known Member

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    Upon further reading... I believe if I put the 50k into the existing split with 80k which has at time had personal funds in and out of it then this would "pollute" that split with mixed purpose funds.

    Option 1) new split for the 50k also offsetting the increased loan

    alternatively I think I could do

    option 2) close the 80k split, open up a new offset account and have the combined 80+50 in there? (or is this still mixed purpose funds even if no transaction history in there?)
     
  3. Terry_w

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

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    Doesn't make sense. If it was an $80k and you took out $80k why is $50k available? Is it a $130k split?

    Sounds like a mess and you should get some tax advice.

    I just saved someone who had borrowed extra and parked it in an offset account and then immediately contaminated it.
     
  4. Jamesaurus

    Jamesaurus Well-Known Member

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    To clarify,

    Had a 80k split loan- used this as a deposit for an IP,
    Since then I have saved up 80k in an offset.

    Also in that time the property grew in value, so I increased my loan and the additional 50k of funds are sitting in the 80k loan account at present.

    So I think if I put the increased funds into a new offset split, and only use this account to take cash out of when I'm ready to by my next investment, then it remains for investment purposes only. But unsure about option 2 I raised..
     
  5. Terry_w

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

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    you have made at least 2 mistakes. why won't you seek advice before you make the 3rd?
     
  6. Jamesaurus

    Jamesaurus Well-Known Member

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    To answer directly and being honest- the last broker I engaged to set up two loans based off their posts on this forum hasn't replied to my emails in Jan or April regarding similar questions. They supposedly had a good rep and their forum responses looked pretty good, but their service and lack of communication was a really disappointing experience. My preference is not to name and shame though.

    But re: this scenario I really thought option 1 is consistent with responses to Tax tip 1: you Tax Tip 1: Parking borrowed money in an offset account
     
  7. Terry_w

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

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    Are you talking about me? Brokers cannot give tax advice so why you write this in response to my question to get tax advice and I haven't had any emails from you.
     
  8. Jamesaurus

    Jamesaurus Well-Known Member

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    No, to be clear I'm not talking about you- another member.
     
  9. Terry_w

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

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    There are no other brokers here that can give tax advice. Only a handful in the country. Best to ask your accountant
     
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