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Reimbursing deposit for new IP purchase

Discussion in 'Accounting & Tax' started by menty, 24th Apr, 2016.

  1. menty

    menty Well-Known Member

    Joined:
    30th Jun, 2015
    Posts:
    65
    Location:
    Sydney
    I have done a refinance and new purchase for a new property at about the same time. However am wanting to know if my balance owing to the solicitor and remaining 20% will be tax deductible. This is the situation.

    IP1 had a current loan set up with Macquarie as
    Offset to Loan A
    Loan A (IP1) - $480K
    Loan B - $155K (as available equity. $60K was used as a deposit for a previous purchase IP2)

    IP1 was refinanced to access equity and split with CBA as
    Offset to Loan A
    Loan A (IP1) - $480K
    Loan B (IP2) - $60K
    Loan C (available equity) - $200K
    (the refinance has not been settled yet, however it will very soon)

    IP3 was purchased and the initial 10% deposit was paid from Loan B (Maquarie). Stamp duty has been paid to the Solicitor trust account from Loan B (Macquarie)
    I have transferred all my offset money from Macquarie to the offset account of CBA. The loans for CBA are not active yet.

    There is still a remaining 10% deposit and solicitor fees to be paid just prior to the settlement of IP3.
    I understand the best way to pay for this is to transfer the amount from Loan B of Macquarie, but I will not be able to access this account IP1 loan is also about to settle.

    What is the best way to pay the remaining 10% deposit?
    1. Get a cheque from CBA from my offset account (which is currently not offsetting anything) and once the IP1 refinance loan settles, reimburse myself from the Loan C CBA account?
    2. Transfer the remaining 10% deposit to an external savings account with 0 balance. On the day of settlement of IP3 get a cheque for the deposit and then reimburse myself from the Loan C CBA account?
    3. If the refinance for IP1 with CBA settles before the settlement of IP3, it would be much easier to transfer that amount from CBA loan C to the solicitors trust account correct?

    I guess I could borrow the remaining balance from parents as a loan. Then a few days later pay them back from Loan C once CBA as settled?

    Are there any other ways to keep my remaining 10% deposit tax deductible that I have missed out on? I have been advised to go with Method 1, but am concerned I will be mixing private and investment funds. Im also aware that there is no loan present so I wouldn't be offsetting anything anyway and it would just be fine to reimburse myself?
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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    Sadly you can't reimburse yourself. Can you use the macquarie funds in loan B or is that all used up now?
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Wow, what a confusing mess and I am not sure that I follow properly.



    but



    1. You will be paying cash if you do this.

    2. What is the source of the remaining 10% you refer to here?

    3. You should borrow from CBA loan C to pay the solicitors.



    Delay settlement on the purchase if you have to – after legal advice.



    If you borrow from parents it has to be properly set up or it won’t be consider a loan.



    Who has advised you on method 1? What aspects did the advice cover?
     
  4. menty

    menty Well-Known Member

    Joined:
    30th Jun, 2015
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    65
    Location:
    Sydney
    Macquarie funds in Loan B are not used up there is plenty left. However, my concern is that I will be locked out of it during the refinance settlement.


    WRT Terry's comments.
    1. I know I will be paying cash , but no interest has been paid or anything because it is not offsetting anything?
    2. The source of the remaining 10% deposit will be from Macq Funds in Loan B while I can still access it.
    3. Ideally I'd like to borrow from CBA loan C to pay the 10% but I don't think the settlement for that loan will be before IP1 Settles (Thursday). . I'v called CBA and they havn't given me a firm date yet
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    1. I don't see how that is relevant?


    3. delay your settlement of the purchase if you have to.
     
  6. menty

    menty Well-Known Member

    Joined:
    30th Jun, 2015
    Posts:
    65
    Location:
    Sydney
    Thanks Terry. Ill see what I can do this week.