Tax complications, (need help)

Pardon for my lending inexperienced but would you not able to refinance? It seems you would not have any issues with serviceability. A mortgage broker should able to help you out

 

refinancing wont help with interest deductibility for tax purposes

 

hi @MikeLivingTheDream @Terry_w

It was the tax accountant that I do the tax return with. Though I would love to get the second opinion on this. But I just don't know who I should talk to. I am in Surry Hills, and work in North Sydney, could you recommend someone that I can talk in the area? Also, May I know what is the cost roughly that I should expect?

Cheers,

 

@Paul@PFI is based in West Pennant Hills. why not give him a call. I dont know his charge out rates for consultations but give him a call.

 

We arent concerned with where any client is and have clients worldwide. Video and phone conferencing is the norm pus the occasional real face to face where I stun with my charming features .

Face to face is so 1950s and with traffic in Sydney a half day of life you cant recover.

 

agree 100%. i very rarely see clients face to face these days. traffic, paying for rent on premises, overheads for receptionists, etc. Why pay for an office to be honest when the work can be done anywhere in the world. advice is the same, work is the same.

 

hi guys,

I've finally got a great talk with a license tax adviser. The fee is a little higher than I expected but it's worth the price. One thing I am still having a little doubt (not that I don't believe them, I just want to confirm if it's true, that's all).

Since I have $250,000 redraw availability in my loan and if I redraw for non-investment purpose, it won't be tax deductible. But the bank still debit my money for the repayment every month which mean I still put more money into the loan.

They recommend to use "Pausing / Reducing Repayment". It means I can stop or paying less the repayment (no more money into the loan) but the bank is still taking the repayment from the redraw availability. I have checked with the bank and it's possible to do that. the bank said there will be no transaction for the repayment and no transaction of redraw. The repayment just stop as long as I have redraw amount enough to make the repayment. And I have to pay bank fee which is so little compare to what I will get.

What I need to know if I decide to pause repayment, will that cause even more pain to the tax deductible?

 

The loan isnt deductible at present.

So they will take money from the redraw to make payments against the non deductible debt ?

Why would this cause any tax issues ?

 

Currently, it's still tax deductible.

 

Yes sorry the loan was for investment. I was thinking it was for your ppor.

 

The current loan I have is for an investment property. That's why it's tax-deductible.

It's OK. My case is complicated. The tax advisor says the same things.

 

Not complicated to be honest. Just knowing the flow.

Private ruling 75673 has a similar situation and the interest was held to deductible. It does have a big warning about part iva so maybe worth getting a private ruling or a reasonable arguable position paper from them to give some protection.

 

this is just capitalising interest. Get advice on part IVA

 

They didn't ask the right follow on question. Interestingly the ATO suggested that they should ask about Part IVA.

 

Can I ask what the fee was? And which bank and product? Most lenders would not take a repayment from the same loan.

And what is your reason for doing this?

 

Which probably means the ato thinks it might well apply and we have warned you.

 

Can't recall seeing the ATO make tip like this in a private ruling before.

 

guys,

In fact, I was told specifically NOT TO TOUCH that loan anymore. and NOT REDRAW EVER AGAIN! if I still want to keep the loan interest to be tax deductible.

I was a little fast forwarding my story a bit but to clear the topic, Let me tell you this:

• This is about my 1st loan that I am talking about and it's an investment currently.
• I put the extra money into the loan for about $250,000 and it makes the outstanding balance at $16,000 at the time of writing this message.
• I was told to DON'T TOUCH, DON'T REDRAW, DON'T REFINANCE, DON'T SPLIT that loan.
• Now I was concern that I still have to pay the "repayment" every months. The repayment I pay is for principle + interest.
• So, firstly, I was told to maybe pay just interest only just to reduce the monthly repayment to help me keep the cash flow.
• But when I talked to the bank, I found out another way which comes to "pausing the repayment".
• Then I check verbally with them and I mentioned this quickly. I HAVEN'T DONE it. That's why I check for the other opinion with you guys.

and I am thinking right now ... I will NOT do it.

 

What is the purpose for which you were advised not to touch it?

 

As long as I want to keep claiming tax on loan's interest on that account.