Two properties under one loan ANZ package

Discussion in 'Accounting & Tax' started by flosed, 13th Jun, 2019.

Join Australia's most dynamic and respected property investment community
  1. flosed

    flosed Well-Known Member

    Joined:
    19th Feb, 2016
    Posts:
    60
    Location:
    Sydney
    Say . I have one ANZ loan package containing 2 IPs both P&I.


    IP1 under joint name with offset account .

    IP2 under my wife's name only without offset account(cause ANZ only supply one free offset account in loan package :( )

    Currently rental,expense etc of IP1 goes to/from offset of IP1. Rental, expense etc. of IP2 goes to/from IP2 loan account directly. The keyword is not mixed.
    Since my wife has less income. I tend to repay more IP2 to get tax benefit. Could I direct all rental income to IP2 loan. Pay all expense from offset account?

    Will it ruin the 2 separated loan ?

    Thanks !
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,666
    Location:
    Australia wide
    There are no issues with mixing cash. You should ideally not mix borrowed money with different purposes or borrowed money with cash.

    So unless the offsets contain borrowed money should be no problem
     
  3. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,130
    Location:
    03 9877 3000
    The ANZ will allow an additional offset account on a second loan under their Breakfree package. It can't be set up as part of the application, but they will set up a second account after the loans have been set up.

    I've done this for clients and I've done it for myself.
     
  4. flosed

    flosed Well-Known Member

    Joined:
    19th Feb, 2016
    Posts:
    60
    Location:
    Sydney
    Offset account does contain borrowed money

    So , let me change my question.

    What if I direct 2 rental income to Ip2 loan account. Expense of ip1 from offset account. Expense of Ip2 from Ip2 loan account?

    Thanks.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,666
    Location:
    Australia wide
    You had better see your tax lawyer or tax agent for some specific advice if the offset has borrowed money. Sounds like you might be indirectly borrowing to pay expenses too.
     
  6. flosed

    flosed Well-Known Member

    Joined:
    19th Feb, 2016
    Posts:
    60
    Location:
    Sydney
    My tax agent has no issue about borrowing to pay expense.

    My concern is if I do thinks like this, I borrow to pay interest + expense in IP1 which raise another question about "Capitalising Interest" . My accountant is not sure about . :)
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,666
    Location:
    Australia wide
    Borrowing to pay interest = capitalising interest