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Mortgage Offset Loan, IP, and Principal Residence

Discussion in 'Accounting, Tax & Legal' started by Almighty, 27th Mar, 2012.

  1. Almighty

    Almighty New Member

    Joined:
    27th Mar, 2012
    Posts:
    1
    Location:
    Melbourne
    Hi
    I have seen a previous post by "Palmtree" on this topic on 4/8/10 but my situation is slightly different.
    I bought an IP in 2010 with a Mortgage Offset Loan of $592,000. We plan to move into it in 2013 but although a nice area, land is not very big and we are considering to live in this house for a short time only.
    I am currently claiming the interest on the loan as it is a rental property and once I move in then I will stop claiming the interest as it will become my principal place of residence.
    The question is say in 2016, I have $580,000 in my offset account so I am effectively paying interest on $12,000 (ie $592k-$580k). Can I then use that $580,000 to buy another property which then become my new principal place of residence at settlement. At this time I start renting out and claiming the interest on the full $592,000 loan (on the original IP) all over again?
    Is this a legitimate process and legal?
    Look forward to anyone's thoughts/knowledge on this.
    Regards
    Adrian
     
  2. Terryw

    Terryw Well-Known Member

    Joined:
    9th Jun, 2006
    Posts:
    653
    Location:
    Sydney
    Yes, as long as the offset account is a true offset and not a redraw facility which is called 'offset'. This works as your money has not touched the loan account but remained separate.