Join our investing community

Margin Loan - payed some off and now to redraw

Discussion in 'Shares' started by scottina, 12th May, 2008.

  1. scottina

    scottina New Member

    Joined:
    12th May, 2008
    Posts:
    1
    Location:
    London, uk
    We are non residents at the moment and have a margin loan. While non residents you are unable to claim interest on a margin loan, we did pay some money into our margin loan to reduce the interest we were paying while we are non residents.

    Can anybody tell me if we were to remove the money we put into the margin loan if this is considered redrawing on the loan. We do not intend to remove any more than the amount we put in....in hindsight this was probably a very silly move, we should have probably consulted someone before doing this. The money we want back from the margin loan would go towards a car and house ie non investment purposes.

    Cheers
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,619
    Location:
    Sydney, Australia
    Unfortunately this redraw would be considered to be a new borrowing and would be classified as personal (ie non-investment) use.

    It is theoretically possible to do what you are planning - but you need to be very careful since you will have to account for the interest on that component separately from the rest of the margin loan interest (and not claim it). However if you make other payments (even just distributions or dividend payments) things get very messy very quickly. Either way I'd suggest getting some advice from your accountant or tax specialist before redrawing the money.