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Keeping Loan Uncontaminated

Discussion in 'Accounting & Tax' started by montoya, 23rd Sep, 2015.

  1. montoya

    montoya Well-Known Member

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    After already screwing one up, I'm looking to keep this next one clean.

    We have refinanced and accessed equity from another property to purchase a new one. I have only withdrawn available funds for the $10,000 deposit paid to the sales trust account so far. Could any of you knowledgable peeps please confirm that I can use the funds to pay for any/all of the following without contaminating the loan split:

    -Pest & Building Report
    -Conveyancing Fees
    -Bond clean (house is filthy and needs a good clean on settlement to lease out)
    -Carpet clean (as above)
    -Painting
    -Air con supply and install
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  3. montoya

    montoya Well-Known Member

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    Thanks Terry. I thought I had read a post with that information before, but couldn't for the life of me remember whether it was on SS or PC. And my keywords in the search didn't point to this thread.

    Much appreciated!
     
    Terry_w likes this.
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    No worries Montoya. The tax tips save me having to keep typing again and it is good to have a central point of discussion too.
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Its important to realise that a loan may become "tainted" through mixed use of the funds but that doesn't mean deductions are at risk.

    If a taxpayer adjusts the % of the deduction for the mixed use / private purpose then the ATO don't have a issue. The problem occurs more with LOC style loans and multiple instances of redraws etc Best practice is separate loans.

    I often see clients who use redraw on a IP as a one off to buy a car for example. Their only source of available cash. Provided the loan % is adjusted so that its no longer a 100% deductible loan then there is no major issue.