Interest deductibility 20% deposit offset account

Discussion in 'Accounting & Tax' started by Aaron Duffie, 19th Feb, 2019.

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  1. Aaron Duffie

    Aaron Duffie Well-Known Member

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    If I use funds from my PPOR home loan offset account for my 20% deposit on an IP, and then do a split on my home loan account so the 20% is separate from the PPOR loan, can I then claim interest on this 20% split?
     
  2. Brady

    Brady Well-Known Member

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    NO - offset is cash, not loan.

    Take funds from offset for the desosit, pay down loan, redraw funds (either direct to pay deposit or separate offset maybe at worst if same day)
    Then split loan.

    Seek specific advise.
     
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  3. Terry_w

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

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    Split the loan, then pay down the 20% split and reborrow
     
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  4. ChrisP73

    ChrisP73 Well-Known Member

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    Agree likely accurate in this case but not always true. If the funds in the offset have been drawn directly from a loan account and no other cash has been deposited or mixed with the borrowed funds then the cash in the offset *is* borrowed funds.

    You need to keep careful track of which of your offset accounts contain soley borrowed funds and which contain deposits/savings and never ever ever confuse them...
     
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  5. Terry_w

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

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    Really there is no authority for this. Prob a better way to put it is that there would be a good argument that the funds could be traced to borrowed funds
     
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  6. ChrisP73

    ChrisP73 Well-Known Member

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    Which is interesting and annoying at the same time given that it seems most banks don't allow you to transact directly from a loan account! In this case what would be the difference between say drawing a bank cheque directly from the loan account to settle and drawing the funds to an offset account and then drawing a bank cheque to settle?

    Or, how do I use borrowed funds from a loan account to purchase listed investments with out using a trading cash account?

    Not saying you're wrong just that practically speaking these are the situations ordinary investors / tax payers are faced with.
     
  7. Terry_w

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

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  8. ChrisP73

    ChrisP73 Well-Known Member

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  9. Aaron Duffie

    Aaron Duffie Well-Known Member

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    Thanks all very helpful although I think I’ll have to get specific advice as my situation is complicated!