Invest loan with linked off set accounts

Discussion in 'Accounting & Tax' started by newtoinvest4, 5th Nov, 2020.

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  1. newtoinvest4

    newtoinvest4 Well-Known Member

    Joined:
    8th May, 2019
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    Location:
    NSW
    Hello everyone

    Ok, so I've purchased a holiday home. The mortgage has been set up as an investment loan as we plan on letting it to holiday makers sporadically throughout the year when we are not using it or only using it ourselves, depending on what happens with COVID, not 100% sure yet. The loan for this property has 1 off set account linked to the mortgage account where we deposit funds into every week for the purpose of paying the mortgage and other associated costs with this property.
    We can open up to 10 off set accounts with this loan product. We're thinking about parking our savings we have with another lender to save on interest on this loan? We have no other debt to pay off, this is it. If we do this, will it cause a headache at tax time? I've heard the term 'loan contamination' would this apply to us if we do this? I'm not really clear of what we can claim at tax time apart from interest payments (which would be minimal for us) any advise for this novice investor?
    Thank you
     
    newtoinvest4, 5th Nov, 2020
    #1
  2. Terry_w

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

    Joined:
    18th Jun, 2015
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    Australia wide
    There is no tax issue with putting money from various sources in an offset account.
     
    Terry_w, 5th Nov, 2020
    #2
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