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Offset Loan and Interest Payable

Discussion in 'Accounting & Tax' started by Zine, 19th Sep, 2016.

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  1. Zine

    Zine Member

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    Hello - i was searching this forum (probably not hard enough) and i couldn't find specific answers so i thought to ask:
    Every fornight i get a salary which i pretty much deposit straight into my offset account. I live off the credit card that i pay every month - i withdraw and pay from my offset account as well.
    Say, i have a investment property and i get rent of 24k/yr. IO loan and total expense is 24k/yr as well. So that means all my rental income pays for the expense.
    If down the track, i use 1500 for my gf's b**b job, i might end up paying 24200 that year for interest but since it went from my offset account(which is like my saving) i can claim that as a expense.
    so my question is how does this really work? Does that mean i can use money from my offset account and whatever interest i pay at the end of the year, i will claim? I ask this because at the moment as soon as i get my salary, i transfer to my offset account and pretty much live off the offset for repayments etc.
    Apologies if its a really dumb question but its just it doesn't make sense to me.
     
  2. jprops

    jprops Well-Known Member

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    The offset is just cash. It is your money and you can do what you like with it. The offset account is a product offered by the bank, whereby they will offset the loan amount by the value of the offset account i.e. they only charge you interest on the loan - offset.
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    You've pretty much got it - every dollar in your offset reduces the interest you pay on your loan. So if you spend your offset money on whatever, your interest payments will go up. If the loan you're paying interest on is for an investment property, you can claim a deduction for that interest.
     
  4. Ed Barton

    Ed Barton Well-Known Member

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    Where do you get a boob job for $1500? Is the work experience kid doing it?
     
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  5. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Thailand.
     
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  6. Weaver

    Weaver Active Member

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    I'm really hoping that your girlfriend knows that she is beautiful and that you don't need her to change anything! Then you can put the $1500 towards a holiday instead :)
     
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  7. Ed Barton

    Ed Barton Well-Known Member

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    I don't think it's that cheap; even in Thailand. Perhaps you could get one breast done for $1500, save up and return to get the other one done a year later?
     
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  8. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Haha - and get the first one fixed while you're back :)
     
  9. Azazel

    Azazel Well-Known Member

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    That would be my concerns, seems a bit cheap.
    Maybe they save on the anaesthetic?
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    BTW, Breast enlargements cost around $4,000 in Thailand (not I have never funded one (or two)).
     
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  12. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    I thought you'd done a tip on cheap boob jobs for a moment there! And I thought, Far out, this guy knows EVERYTHING! :p

    Edit - turns out you do! :D
     
  13. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I know a thing or two!
     
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  14. Ed Barton

    Ed Barton Well-Known Member

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    Women getting breast augmentation is not always about pleasing men, but often about pleasing themselves.
    Just hand the patient a bottle of Rum. That will do as anaesthetic.
     
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  15. Azazel

    Azazel Well-Known Member

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    Would probably be one of those homemade methanol cocktails, not sure you would wake up.
     
  16. Weaver

    Weaver Active Member

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    lets hope @Zine 's original question got answered - we've all been happy distracted by his/her alternative use of funds!
     
  17. Tom Alaka

    Tom Alaka Member

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    @Zine - if hasnt been said already (sorry sidetracked by all this b00b talk!), check that you have a true 100% offset account, not one of those dodgy partly offset accounts (do these offset type accounts exist anymore?)
     
  18. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Yes, St George have 3 different ones and Bankwest have a 40% partial for fixed rates. Im sure there are others that have psuedo offsets as well.
     
  19. jprops

    jprops Well-Known Member

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    also make sure your offset is linked to the homeloan :p I just created a 2nd offset 5 days ago and moved a substantial amount into it. Found out today that it had not been linked to the homeloan!!!!
     
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  20. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Very common and banks will blame the broker and say they should have arranged it. An offset is an offset and banks should be doing it as a matter of course but there like little children, you can give them specific instructions but always pays to follow up and make sure the instructions have been applied.