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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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  3. Terry_w

    Terry_w Well-Known Member 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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  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 Well-Known Member 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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