Redrawing and maintaining deductibility

Discussion in 'Loans & Mortgage Brokers' started by Bran, 1st Jul, 2015.

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  1. Bran

    Bran Well-Known Member

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    Dumb question.

    I need access to redraw funds on an IP loan for a legitimate tax-deductible (but not property related) expense.

    How can I get these funds to the third party and maintain deductibility without refinancing or splitting the loan (I don't have the time to do this).

    Ta
     
    Bran, 1st Jul, 2015
    #1
  2. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    If it's a deductible loan - and the funds are being redrawn for deductible purposes.....I'd assume it would all remain deductible. Hit up your accountant though.

    Cheers

    Jamie
     
    Jamie Moore, 1st Jul, 2015
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  3. albanga

    albanga Well-Known Member

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    I agree with Jamie, just make sure it doesn't pass through an account with personal funds.
    I have read a bank cheque being mentioned before.
     
    albanga, 1st Jul, 2015
    #3
  4. Terry_w

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

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    Won't be deductible unless you are onlending at the same or a higher interest.

    What you would do is enter into a loan agreement with the other party. Then split the loan down the track.
     
    Terry_w, 1st Jul, 2015
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  5. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

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    What if he was buying shares, for eg? Could he just buy them and use a spreadsheet to keep track of things?
     
    Jess Peletier, 1st Jul, 2015
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  6. Terry_w

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

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    Oh, I read it he was giving to a 3rd party such as a spouse who would invest.

    If investing in shares directly then the same principles apply. Borrow to invest, transfer from the loan account to the brokerage account and then just apportion the interest by using a spreadsheet. Won't matter if you get it wrong as the tax will be the same overall.
     
    Terry_w, 1st Jul, 2015
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  7. Bran

    Bran Well-Known Member

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    No, I am paying an expense related to my primary profession/business.

    I need the money to go directly to the company providing the service.

    So, one can transfer redrawn funds directly to a non-linked account by the sounds of it.
     
    Bran, 2nd Jul, 2015
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  8. Bran

    Bran Well-Known Member

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    Or, even better, can I pay the expense on a credit card with nothing else on it, then transfer the redraw to the credit card, and still claim the redraw? I'm trying to get redraw funds rather than use those offsetting non-deductible interest. It's a reasonable amount of coin.
     
    Bran, 2nd Jul, 2015
    #8
  9. Terry_w

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

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    Yes if the cc has no other expense you can refinance this debt by borrowing. Don't go via any intermediary account but pay directly from the loan.
     
    Terry_w, 2nd Jul, 2015
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  10. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    sounds like there wpuld be some excellent opportunities for deb recycling PPOR debt if you have same for future outcomes such as this

    ta
    rolf
     
    Rolf Latham, 2nd Jul, 2015
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  11. Bran

    Bran Well-Known Member

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    Rolf,

    I have huge capacity for debt recycling, and am not doing it at all!
     
    Bran, 2nd Jul, 2015
    #11
  12. Terry_w

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

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    Just avoid debt composting.
     
    Terry_w, 2nd Jul, 2015
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  13. Bran

    Bran Well-Known Member

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    What does that mean Terry?

    I can only guess piling and piling it up without ever paying it (or the non-deductible debt) off in it's place.
     
    Bran, 2nd Jul, 2015
    #13
  14. Terry_w

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

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    Not sure what it means yet as I just made it up. But it could relate to mixing purposes and letting the deductions dissolve.
     
    Terry_w, 2nd Jul, 2015
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  15. Bran

    Bran Well-Known Member

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    Lol
     
    Bran, 2nd Jul, 2015
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