Stupid Qs - Put loan money back so accessible from Redraw?

Hi guys,

I have stupid question.

Obtained separate loan for IP deposit (PPOR as security).

The loan money is paid to the attached offset account. SO, to make sure I maintain deductibility, I should pay that money back to the loan so it's available from the redraw, then use this to pay deposit etc?

To summarise - current setting

Offset: $50K
Loan: -$50K
Redraw: $0

So I need to make it
Offset: $0
Loan: -50K
Redraw: $50K - use this to pay all purchase cost?

Is this correct?

 

Yes, But always check you have a redraw facility and the lender wont close the new account when the balance is fully repaid !!.

 

They do,

But per call with them any fund I put in today won't be available for transaction until tomorrow .... even if it came from my Offset with them

 

Tax Tip 1: Parking borrowed money in an offset account https://propertychat.com.au/communi...ing-borrowed-money-in-an-offset-account.1313/

 

hi terry - i like that post

"Some have argued that where the savings account is empty then there will be no co-mingling of borrowed and non borrowed funds if the loan is drawn down into this account. This is true, but where interest is incurred on the borrowed funds it cannot be deducted as there is no income, or commercial income generated. However where the savings account is an offset account there is no interest incurred at all as the borrowed money is in the offset offsetting the loan. If this borrowed money is later used for investment then the interest will start to be charged on the loan. I think this interest can be traced to the investing and the interest should be deductible (assuming no mixing)."

as i am investigating the option of this through home loan split (offset + withdraw). i might call up the ATO to ask a question and get a reference or write in for a private ruling.

 

Thank you @Terry_w just want to make sure I get it right

 

Not a stupid question at all. People get this wrong all the time.