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Offset vs redraw urgent advice required

Discussion in 'Investment Strategy' started by Bean27, 25th Mar, 2019.

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

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Bean27 said: ↑

Adding to my frustration he had no concept of the term multiple purpose loan. He argued with me saying an Offset account and a Redraw facility is the same thing. I pointed out to him that if I pay extra into my current loan, then later redraw and rent my home out as an investment property then I cannot claim the interest I pay on the loan as a tax deduction. Reason being is it will become a multiple purpose loan. He said he had never heard of that term and went on about redraw being the same as off set. Am I going insane or what?
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'mixed purpose' loan is the more common term, but multiple could work.
If your loan ended up a mixed purpose loan in this situation you could claim at least part of the interest,
But you are right, an offset would be better than paying down the loan.

Terryw
Solicitor, Mortgage Broker and Chartered Tax Adviser
The Structuring Podcast

Terry_w, 29th Mar, 2019

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