Offsetting investment loan

Hi, just looking for advice while I wait to see an accountant/financial advisor.
I recently bought a property off my in-laws for $550,000 (worth $730,000) and owe $570,000 on it from stamp duty and legals. I paid $50,000 tax this year and hardly got anything back in my return and now we are going to rent out our property for $515 a week and my wife and I are going to live in my in-laws other property free of charge. Our plan is to buy in another suburb for around $700k which isn’t ideal with claiming CG on the smaller loan and having the larger loan on our PPOR. We have about $30k in savings but don’t currently have an offset account. Now to my question, would it be better to set up an offset on my investment mortgage for my savings and future savings? Or for tax purposes leave the money in a savings account until we buy our new PPOR.
Thanks

 

If one of you is on the lowest tax bracket - ie, doesn't pay tax at all - it might be better having the funds in her name in a high interest account if you earn a decent sum. Not sure what the going rate is for high interest accounts atm. Run the numbers, or get your accountant too.

 

You didn't structure this very well, and this will cost you going forward to the tune of about $10,000 per year in lost deductions.

As to whether you need an offset see:
Loan Tip: Not everyone needs an Offset Account Loan Tip: Not everyone needs an Offset Account

 

Offsetting a deductible loan is often the third best choice. The second best choice may be be to offset v's a non-deductible loan which may not be a option. The best choice can be to earn interest in the name of the taxpayer who earns a low (or Nil) marginal tax rate.

As Terry suggested the structuring of the two matters may be poor. You plan to have a low LVR on the deductible loan but a high LVR on the non-deductible?

 

Yes not ideal at all. We purchased this property to be our forever home but our circumstances have changed. We were going to sell it, but we think it’s a to good of a property to sell with the rent and capital growth. I’m new to all this and hopefully going to see an accountant will help me get my head around it all

 

Thank you for the reply. I replied to the wrong msg haha.

 

I will look into this. Thank you.

 

Thank you for the reply. As above says. Not ideal but our circumstances have changed with another child on the way etc. Our thoughts were, if we sold this then bought our own home, yes we would have less debt on our home, but then in a few years we bought another investment property for the same price as we bought this property ($550k) our rental income and capital growth wouldn’t be as high.