Use of IP equity to invest in shares

Has anyone here created a loan split from equity in an IP to invest in shares.

How have you structured this to avoid contamination or mixed purpose loan.

Some preliminary advice I've received is that it is best to keep all personal investment from cash separate to that of the loan. Would that require a single broker account for that loan?

Any thoughts on this would be appreciated

 

I think there's a tax tip posted by Terry regarding this.

As you mentioned, it is basically requesting for another loan split from equity of a property and the equity released will be used to purchase shares.

Do not mix your personal money from the released equity as this might contaminate your loan if used for non investment purchase. (seek tax advice though)

Do you have a non deductible loan to do a debt recycle against instead of using your personal money?

 

Just set up a new split
And borrow to invest without mixing the borrowed money with cash at any stage.

 

On a slightly different note.

My wife and I have a IP $500k loan with a $200k LOC attached, split 50/50%.

Can I use the $200k to buy income producing shares and claim the interest on the LOC?

If not is there away around this?

 

Depending on the circumstances yes.

 

I've done this using a CBA viridian LOC to buy shares and claim interest on the viridain. Have also used the viridian to pay off my margin loan and claim the interest.

 

Thanks Terry, I will have a chat with my accountant, what circumstances should I be considering?

 

Write these sort of loans all the time - just need to set up a new loan against the security. Keep it simple. Easy peasy.

Cheers

Jamie

 

Generally the lender will seek evidence (accountants letter) that funds will be used to invest in shares etc. I have had some people tell me they just want to access the equity so = no letter

 

Yes, thanks.

So what about the scenario where I have invested into shares through my commsec account with cash. I then use borrowed funds to invest through the same commsec account for the same shares. What potential issues, if any, might I need to consider?

 

You will have 2 parcels of shares. One which you acquired with cash and one with borrowed money.

No issues really just make sure there is no cash in the comsec account.

 

If you think blended loans are problematic use a loan for shares. Most people dont understand the issues and overclaim and get it wrong. Margin loans are less prone to the big three mistake

 

I have an equity loan against an IP of $200,000 with $200,000 available cash sitting in an attached offset.

I've used $150,000 to purchase other IP. Does anyone see any issues if I use the remaining $50,000 to purchase dividend-earning shares?

 

It will be a mixed loan but not big deal just apportion the interest. Take care when selling shares.