Hi I've purchase my first IP, due to settle in a few months and hoping I could get some tips on structuring my loans for maximum tax benifits PPOR Value 1.15M , LVR 80% Loan of 740K - fixed 2 years 2.09% Loan of 180K - variable with offset 2.49%. (Interest deductable as it was used as a deposit on the below IP) IP Value 890K, LVR 80% Loan of 710K - fixed 3 years 2.49% ( Interest deductible) I have 40k cash to be used for stamp duty payable in a few months on the IP settlement , is there anyway I turn this into a loan and make it interest deductible? I would have paid down my PPOR loan and redraw it, but the PPOR loan is fixed now Do you guys have any tips on how I should consolidate my loans in the future and the best way to structure a loan for a 2nd IP in the future? Thank you!
Why not debt recycle the money for the stamp duty too/? You shouldn't have fixed so much. You will need to consider what the break costs are and what the extra interest costs would be should you break it and then assess if the interest savings are going to be worth more than this. Alternatively borrow the $40k elsewhere and refinance that later.
Thanks Terry I know now to leave a portion of non deductible debt unfixed.. Ideally should I have done the below? Set up the main residence loan as variable, split the loan between 40k and the loan balance, pay 40k cash into the 40k split and redraw the funds to pay stamp duty. The interest on the 40k split would be deductable Going through all your very helpful tax tips at the moment! Question - I have 140k cash sitting in an offset account which is tied to a 180k loan account with the purpose of paying for my IP. There was originally 180k cash in the offset but I paid 40k as a deposit at auction for the IP. The 140k balance will be used on settlement day for the IP. I think I have made a mistake of depositing an addition 40k of non borrowed money into my offset. The 40k will be used to pay for stamp duty on settlement day. Can I still claim the interest on my 180k loan?
No Tax Tip 9: Don’t use Cash in Offset account to Invest Tax Tip 9: Don’t use Cash in Offset account to Invest And see this one Loan Tip: Fixing the Main Residence Loan – 3 things Watch out for https://www.propertychat.com.au/community/threads/loan-tip-fixing-the-main-residence-loan-3-things-watch-out-for.54363/
Looks like you fixed PPOR $740k on the assumption you had no savings to offset that loan. Problem is you probably don't even want to break the fixed loan and debt recycle cause the rates you got are pre rate rises. Looks like you're stuck a little.
Yes unfortunately I will have to leave the fixed for the next 2 years as it provides more benefit But next time I definitely know that variable will come in handy even through I predict no saving in the next few years, since I can debt recycle
This is unfortunate To clarify I have split my residential loan, and have a 180k split loan with the cash sitting in a offset account. This is cash to be used for a deposit on the IP. I have also deposited 40k of non borrowed money to cover the stamp duty of the IP. If both the borrowered and non borrowed moneies are used 100% in acquiring the IP, does this help the situation. Would the interest on the 180k split loan be deductible as there is no question the money was used to acquire the IP
FYI the solution to this was to deposit the mixed funds of borrowed and non borrowed money, sitting in the offset, back into the loan account and to redraw it (creating new fully borrowed funds). Got this out of reading your loan tips! Thanks
