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Multiple Home loan splits

Discussion in 'Accounting & Tax' started by melbournian, 23rd Nov, 2015.

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  1. melbournian

    melbournian Well-Known Member

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    @Terry_w if I have a home loan 500k on ppor and offset 500k and then I decide to do a split on equally and into 250k in offset (home loan split 1 )and 250k in redraw in home loan split 2.

    I use the 150k funds in redraw to purchase ip 1 and then decide I want to use the remaining 100k to purchase ip2. From taxation point of view with that 250k be deductible being spread across 2 ip?

    Also if I wanted to split again is that possible with the remaining 250k in offset?
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    HI Melbournian,

    Ideally you'd split the $250k if it's going to be used for two properties, either upfront or before selling either IP.

    You should be able to split the loan the offset is against, however you'll want to get a new offset attached to the new split as an offset can only be attached to one loan.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    this may be wrong as I am not sure what you mean exactly..

    Sounds like you want to pay down $250,000 of the loan so you have it available in redraw. If there are no splits then it will be a mixed purpose loan once you redraw.

    Assuming you split it before redraw, the loan will be mixed between IP 1 and IP2. 150/250th will be deductible against IP 1 and 100/250 will be deductible against IP2. Assuming no further redraws.
     
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  4. melbournian

    melbournian Well-Known Member

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    Thanks @Jess Peletier now that I have split it might be worthwhile to adjust the split so it is 100k and 400k or something

    Is it normal to do like 3 splits like 100k 200k 200k ?
     
  5. melbournian

    melbournian Well-Known Member

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    thanks @Terry_w I have split it but I was thinking if I could use the other 250k in offset for say I did another ip purchase to split again hence wondering is it easier to split 3 ways or can I adjust the amounts? Or can use the funds in withdraw to fund 2 ip purchases.
     
  6. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    It's normal if there's a reason to do so - but not normal to do it for no reason :) It will depend on what you're hoping to achieve.
     
  7. melbournian

    melbournian Well-Known Member

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  8. sandyfeet

    sandyfeet Well-Known Member

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    @Jess Peletier when would it be useful to split several offsets?

    Is it common to setup one offset for, say $300k and use it for several IP deposits?
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I suggest you completely avoid the borrowing and depositing in the offset accounts as it is potentially disastrous.
     
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  10. sandyfeet

    sandyfeet Well-Known Member

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    @Terry_w sorry I didn't mean offset - setting up a new loan secured against a property and using those funds for several IP deposits and no money/rent to go into this loan
     
  11. sandyfeet

    sandyfeet Well-Known Member

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    Just read your ideal loan structure - I'm guessing you could fund several deposits from the new loan secured against another property - so long as they were deposits for IPs only and not a PPR or future PPR?
     
  12. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    You can fund lots of deposits, but make sure you keep a spreadsheet to keep track of how much was used for each property, and split the loan before repaying any of the debts, for eg when selling a property. It gets complex when funds are used to repay the loan, especially if you want the funds to pay off a certain property.
     
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