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Margin Loans Margin Loan

Discussion in 'Finance & Banking' started by hiflo, 3rd Mar, 2008.

  1. hiflo

    hiflo Well-Known Member

    Joined:
    3rd Jun, 2006
    Posts:
    68
    Location:
    Sydney, NSW
    Hi

    I have a margin loan and it's currently geared to 50% but I do expect the rates to go up in the future and want to minimise my interest payments as much as possible.

    With the recent downfall of the share market I had to put extra security in and sold some of the managment funds at a loss to keep my LVR down. (Thank you for those who shed some light into my situation)

    I have a chance to borrow $24K and the interest that I pay for that amount will be $720 for two years, effectively paying $360 interest for $24K per year.

    What I would like to do is to deposit that amount into my margin loan account reducing the debt level and take that money when I purchase my property.

    Would this pollute the deductibility of interest of my margin loan account?

    Best Regards
     
  2. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    TR 2000/2

    Basically look at the use that is made of the redrawn money.

    If you use it to purchase a rental property then the interest is deductible. If this is your private money then you now have a mixed purpose loan. You are deemed to have paid off part of your investment loan when you (temporarily) deposited the money.

    Cheers,

    Rob
     
  3. hiflo

    hiflo Well-Known Member

    Joined:
    3rd Jun, 2006
    Posts:
    68
    Location:
    Sydney, NSW
    Thanks.

    I thought so because I read a similar posting for redraws a few years ago.

    Regards
    Hiflo