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whats the best way to use a credit card to pay for property expenses

Discussion in 'Accounting & Tax' started by Elives, 6th Jun, 2016.

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  1. Elives

    Elives Well-Known Member

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    Whats the best way to use a personal credit card to pay for property related expenses?

    currently i have a offset for personal money, and a offset for my property related money etc rent coming in and bills going out idea of trying to keep the money clean and make it easier come tax time. i want to start using a credit card for property expenses to earn more points + bonus of 30-55 days interest free period.

    from my current set up what would be the best way to use the personal credit card for property expenses and make it easy for tax time?

    would i apportion paying it off from the property offset and the private or does it even matter as it's cash and not equity?


    Elives,
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    There is no reason to separate offsets like you have. In fact there is a reason not to - you will be paying more tax.

    Unless you are wanting to borrow to pay expenses you can just use a credit card and pay if off each month. You can even mixed investment and non investment purchases as no interest will be incurred if you pay it off so no mixing.
     
  3. Elives

    Elives Well-Known Member

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    i thought i was over thinking it haha thanks for that, i thought having separate off set's might make it easier come tax time. etc having 1 just for property related stuff.

    how would i be paying more tax?
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You would be losing interest on the investment loan and gaining a corresponding increase on the PPOR loan because you are having money sit in the offset against the investment.

    This results in lower tax deductions and higher non deductible interest.
     
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  5. Do Androids Dream

    Do Androids Dream Active Member

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    Hi,

    I didn't want to start a new thread but adding to this thread, I'm also thinking about the use of a credit card to keep my money in my offset account.

    How does this structure sound?

    Eg.

    Offset acc 1 > Loan 1
    Offset acc 2 > Loan 2 (larger loan)

    Credit card account > paid off at the end of the month from offset 1.

    ----

    Currently, all salary, rental income, etc goes into offset acc 1 but loan 2 will be greater in the near future. Shall I transfer a greater proportion of funds into Offset acc 2 and leaving it sitting there, as well as direct rent from IP#2 into offset 2?

    Currently, all rates, insurance, mortgage repayments, rent I pay for my accommodation, etc., comes out of my offset acc 1 as well as food, lifestyle expenses. Can these expenses also be paid from my credit card?

    Sorry for so many questions all at once...
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It is irrelevant where you pay expenses from.
     
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