Query on funds in offset account

Discussion in 'Accounting & Tax' started by psylence, 30th Apr, 2017.

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  1. psylence

    psylence Member

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    I currently am renting a place as my ppor but have 2 investment properties. I have been putting my savings in one of the offset accounts linked to one of the investment properties 4.10% interest rate. Is this a bad idea considering it lowers the amount of deductible interest I can claim? Would i be better off putting it in a savings account?
     
    psylence, 30th Apr, 2017
    #1
  2. kierank

    kierank Well-Known Member

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    It depends.
     
    kierank, 30th Apr, 2017
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  3. Ross Forrester

    Ross Forrester Well-Known Member

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    If you have no private debt that is paying interest it is not bad.

    Their might be better options for your money - but I would rather have the bank stop charging me 4% instead of having them pay me 2%
     
    Ross Forrester, 30th Apr, 2017
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  4. Anthony Brew

    Anthony Brew Well-Known Member

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    I was thinking about this exact question this morning.
    Lets say tax rate is 1/3 of income.

    If you put it into the offset, you are getting 4% interest - but you are losing 1/3 of that from tax deductions, so am I wrong to say you are actually only getting 2.666% return on your money?

    That seems pretty crap.
     
    Anthony Brew, 30th Apr, 2017
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  5. Marg4000

    Marg4000 Well-Known Member

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    Maybe it is, but so is bank interest on accounts or term deposits, which is then taxed.
    Marg
     
    Marg4000, 30th Apr, 2017
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  6. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    One option is brickx instead of an offset. Yield + capital growth ?

    I'm just looking at this myself at present.
     
    Paul@PAS, 2nd May, 2017
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