Reverse mixed up offset account?

@Terry_w To keep the loan open I have to take out $1000 which generates say $15 interest per month. Would it be possible to use that $1000 to buy shares (makes the interest deductible) and then use the rest for the deposit on an IP when the time comes. Or does it make it too messy at tax time?

 

You should seek tax advice. If the $1000 was borrowed to buy dividend paying shares then the interest would be deductible - but if you have already borrowed the $1000 this may be a problem.

 

Thanks @Terry_w will do. The problem was that when CBA setup the LOC they withdrew the whole amount and placed it into my other account. So broker advice was to pay it back but leave $1000 out so that it didn't close the LOC

 

If it is a LOC then you could pay down to $0.

If an IO then paying down to $0 would possibly close the account. But perhaps you could pay it down to $100.

If the money was drawn and paid into an offset account and no other money was every paid into this offset then you may be able to argue that the money in the offset can be traced to the loan and therefore borrowed money so that when you spend that $100 or $1000 you can argue it be treated as if borrowed directly from the loan.

 

Just for anyone else in the same boat.... Just spoke to CBA they advised if it is paid down to $1 it wont close the account. To be safe I wont pay it down to $1 until the day I am going to use it just in case

 

Just time it right. You wouldn't want an interest payment to come out while it is $1 as it may close automatically.

 

Ahh good point... You might have just saved my ass! Thanks!