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Offet Account Question

Discussion in 'Accounting & Tax' started by B-Mac, 17th Jul, 2015.

  1. B-Mac

    B-Mac Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    58
    Location:
    Sydney
    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?
     
    Jog21 likes this.
  2. Roosterman

    Roosterman Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    53
    Location:
    Brisbane
    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...
     
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,145
    Location:
    Canberra and Sydney
    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
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,979
    Location:
    Sydney
    Yes, no probs here because the loan is not being touched. The offset is a separate account.