Where should surplus funds go after settlement?

Discussion in 'Accounting & Tax' started by HonestShiba, 7th Mar, 2022.

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  1. HonestShiba

    HonestShiba Well-Known Member

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    Hi PC,

    Generally what should happen with surplus funds after settlement in this scenario?

    Total funds needed to complete transaction: ~$500k
    Funds available for settlement from bank: $420K
    Funds to complete (to be deposited into solicitor's trust account): $80K

    The 80K is drawn down from an IO equity loan, and paid out of an empty offset into the trust account.

    Come settlement, only $78K was needed (total funds needed $498K), and there is 2K surplus in the solicitor's trust account.

    Should the 2K go back into the empty offset, and put back into the IO equity loan? Is it still considered 'borrowed money'?

    Or should the 2K go elsewhere, say another savings/offset account?

    Thanks!
     
  2. Terry_w

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

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    The $2k would be borrowed money so it must be segregated and should probably go back into the loan or could be used to pay future property expenses.
     
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  3. HonestShiba

    HonestShiba Well-Known Member

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    Thanks Terry, that makes things pretty clear. I'll have it go back into the empty offset and then back into the loan
     
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  4. HonestShiba

    HonestShiba Well-Known Member

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    A bit of an unrelated question Terry but would there be any problems if the 80k of borrowed money was online transferred in two 40k parts (due to daily banking transfer limits) as opposed to a single 80k sum?

    Or would it be better to get a bank cheque for the total amount?
     
  5. Terry_w

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

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    You can draw down a loan in stages, it won't generally create any mixing issues
     
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  6. Scott No Mates

    Scott No Mates Well-Known Member

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    My vote would be a decent restaurant or a weekend away but that's just me.