Offset account

Discussion in 'Accounting & Tax' started by pinewood, 10th Nov, 2016.

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  1. pinewood

    pinewood Well-Known Member

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    Tax question please:

    If you have an offset account linked to an investment loan, what is the interest that is deductible - the interest of the full loan or the interest of the reduced loan due to the offset if you have money in there. Eg. 500K loan and the offset has 100K. Do you claim interest deductibility on 500K or 400K?
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    400
    or the actual interest billed

    Im not an accountant though :)

    ta
    rolf
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Interest on the loan will be deductible. The loan balance will be $500,000 but interest will only be charged on $400,000.

    at 4% pa the interest will be $16,000 pa and this would be the deductible amount.
     
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  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    You can only get a deduction on the interest actually charged. In the example above you'd be charged interest on $400k. There is no interest charged on the $100k which is being offset, so there's nothing to deduct for that portion of the loan.
     
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  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Like Rolf said - it's whatever interest you're charged.

    Cheers

    Jamie
     
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  6. pinewood

    pinewood Well-Known Member

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    Thank you everyone, appreciate the replies and great to know the answers are all consistent! :)
     
  7. Colin Rice

    Colin Rice Mortgage Broker Business Member

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  8. pinewood

    pinewood Well-Known Member

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    No, only investment loan.
     
  9. Colin Rice

    Colin Rice Mortgage Broker Business Member

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    Never mind then, was going to say if you had non deductible debt then offset that first.