Tax Query

Say i sell an property and then have $200k or more after paying out all loans, I then put this is a savings account, no issues but its low return

I don't have an offset account on other IP's and don't have a PPOR

I do you have Lines of Credit, I know I will have a CGT bill (of around $50k or so) at end of FY

Could I put the money into the LOC to reduce interest and then pay ATO at EOFY, or is interest deductions tainted on re-draw?

What is the best strategy for funds until EOFY

 

Im not sure where the loc deductibility arises. Confused. Paying tax does not create deductible interest

The due date for tax is when you pay. This wont be at eofy. May be as late as ten months afterwards

 

If you put funds into a LOC to save interest, then later take it out at EOFY to pay the ATO it would muddy the waters for the LOC would it not?

LOC $100k owing..interest deductible

Put $50k in from savings a/c sale of property...$50k owing..interest on $50k deductible

Withdraw $50k from LOC to pay the tax man...now messy

 

You could, but should you is a different question.
If the LOC is deductible now you would be paying it down and reducing the amount of interest claimable.
Borrowing to pay tax is generally not deductible.

 

Why not change the LOC to a term loan and get an offset?

 

If properties all sold nature of the loc may mean deductions end and proceeds should pay off loc...needs tax advice