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Need advise.. Asap

Discussion in 'Real Estate' started by Biksu, 3rd Jul, 2011.

  1. Biksu

    Biksu New Member

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    Hello, need advise here.. Thinking to rent out current ppor and moving out to a new house... Current home loan 320k(interest only) with 100%offset account of 220k.. The property now worth 550-600k.. I'm buying a new place worth around 450k.. What's the best way to structure my loan so i get the maximum tax benefit.. My plan is getting a new home loan(interest only) with another bank with an 100% offset account and then transfer the 220k(minus the deposit of course)into the new home loan offset account.. Any advise will greatly appreciated...
     
    Last edited by a moderator: 3rd Jul, 2011
  2. Billv

    Billv Getting there

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    To get the max benefit I'd stay with 1 lender.
    If you have both loans with the same lender they are likely to give you a discount (off their standard variable interest rate).

    Get in touch with your lender and tell them you want to access all the equity and use it to buy an investment property.

    They'll give you up to $480K-$320K= $160K
    Tell them you want to create a separate loan account for this amount.
    From the new $160K loan you withdraw approx $100K and use it for the deposit + stamps of the new property.

    You then borrow the remaining 80% from the bank as a separate new loan and you leave your own funds alone. When you are ready to move into the new property call up customer service and ask them to link the old offset account to your new loan.

    I hope this helps
     
  3. Biksu

    Biksu New Member

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    Just came back from an accountant.. She said only 100k(320k-220k) is tax deductible.. Is that true??? Need confirmation please
     
  4. Terryw

    Terryw Well-Known Member

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    From what you said above this would not be true.

    Has your loan been paid down to $100,000 and then money withdrawn?

    If you loan has never dropped below $320,000 and your $220,000 cash is in a separate savings account (ie not in the loan as redraw) then the interest on the full $320,000 should be deductible.
     
  5. beejay89

    beejay89 Member

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    I would definitely agree with Bill in regard to keeping with one lender. This will ease the burden of massive administration dramas, both now, in prospect of your change and also at the end of this financial year :) He seems that man for the figures, I'm just a bank johnny so I can only speak from a 'paperwork' sort of view point..
     
  6. Billv

    Billv Getting there

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    The accountant can be correct if your current loan with the offset account isn't in its original structure?
    Or Perhaps you believe you have a loan with an offset but in reality you have some other loan product or a $240K Line of Credit?
     
  7. Biksu

    Biksu New Member

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    TerryW, Billy...
    The loan is still the original structure(interest only loan with 100% offset).. It's still the same loan from when i bought the property.. Which is 320k.. The principal always Stay at 320k, never less than that/never being paid off.. All my salary and other incomes always go to the offset account which is now sitting at 220k.. She said the reason why only 100k tax deductible is because the purpose of the 220k is for buying a property to live in not to invest
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I would actually not recommend automatically going with just the one lender. It might actually turn out to be the best option depending on what other finance is available out there - but in general, I would recommend using multiple lenders for your properties.

    1. NEVER cross-collateralise your loans (unless you really have no choice), this locks you in to the bank's ideas about how much equity your portfolio has and you can have real difficulty extracting property in the future if you want to restructure. It might help you in the short term, but it will really hold you back long-term.

    2. Watch out for all-monies clauses in loan agreements - if things ever get difficult for you, you need to have as much flexibility as you can, but if the bank has the ability to arbitrarily take any money you have in ANY account with them to apply to any loan they've given you, then you lose a lot of flexibility. Spread your money around a bit - having one single creditor gives them all the power and you less negotiating ability should things start going wrong.

    3. get a good mortgage broker - don't go to the banks directly

    I also think you might need a new accountant if they believe that an offset account is the same as a loan redraw. The full 320K should be deductible once the property becomes available for rent.
     
  9. Terryw

    Terryw Well-Known Member

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    You had better consider changing accountants as she could be costing you a lot of money
     
  10. Billv

    Billv Getting there

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    Biksu
    Perhaps she doesn't know that you have a loan with an offset account?
    If she does then like Terry and Sim said you'll need to find a new accountant.