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Claiming Interest on Split loan

Discussion in 'Accounting, Tax & Legal' started by wilr, 24th Jun, 2007.

  1. wilr

    wilr Member

    Joined:
    24th Jun, 2007
    Posts:
    8
    Location:
    Sydney, NSW
    I have recently refinanced to a split home loan to access the equity for investment in managed funds/shares:

    SubLoan1: $25,000 still owing
    SubLoan2 (I/O): $210,000 placed in a margin loan

    The split loan is in my name and my wife's name.
    The sub loans are not linked in any way.
    The margin loan is in my name only.
    As directed by my accountant, we have a signed letter (kept with our tax files) saying that Subloan2 is to be used to invest in my name only, thus all interest claims and capital gains tax payments will be made against my income.

    Until recently, I thought this would be ok to do by the ATO. But after reading some posts here and this:ATO split loans, I'm not so sure.

    Can anyone clarify if what I am doing is ok?

    Great website by the way. A fantastic investment resource.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    Although I don't know your full situation, and am not an advisor - at first glance I'd say you'll be fine ... the ATO stuff on split loans was referring to specific products set up as a tax minimisation scheme where you paid off your PPOR more quickly by capitalising interest on an IP loan.

    A regular loan split into multiple facilities is a very different animal - so I wouldn't think there is need for concern.

    If your accountant is happy - then you should (hopefully) be okay.
     
  3. wilr

    wilr Member

    Joined:
    24th Jun, 2007
    Posts:
    8
    Location:
    Sydney, NSW
    Ok thanks very much.