If i have an offset account (linked to 1 x investment property mortgage) and i always debit/credit money in and out of it (e.g. sometimes i need $500 for a weekend away, or need money for a night out) is this OK? or does it effect my tax deductibility? Should i stop touching my offset account ant let it just receive rent & make interest repayments?
No problems or tax implications at all. In fact you are using it perfectly. When you withdraw $500 for a weekend away your loan balance does not change but the amount of interest payable does because you have less money in the offset. So you will pay interest on the $500 but it is deductible. Effectively everytime you spend your own cash it is tax-deductible as it doesn't change the loan but increases the interest payable. I'm no expert but I expect this is what the experts will say...
Transacting from an offset linked to an IP is fine. Where you may have issues is when you borrow money (say from an equity release) and park it an offset that you regularly transact from. Also not an accountant though - so get pro advice. Cheers Jamie
