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Suggestions on paying the interest borrowed to invest

Discussion in 'Accounting, Tax & Legal' started by bonkerrs, 23rd Jan, 2015.

  1. bonkerrs

    bonkerrs Active Member

    26th Jul, 2007
    Sydney NSW
    I am wanting to borrow money from the bank to start an investment portfolio. To do this I'm after some ideas on how I can repay the interest without digging into my limited savings. If this is possible.

    Lets say I borrow $100k at a rate of 6.5%. I would need to cough up $6,500 p.a to meet the interest repayments. I am looking to invest long term so there wouldn't be any return derived from the $100k for a few years. I'm only wanting to do this if there isn't an impact of $6,500 out of my pocket every year.

    My understanding (or misunderstanding): If the interest is tax deductible after completing my tax return should I receive the $6,500 in deductions? If so, I could put that aside to pay the interest in the following years. So I would just have to afford the first year's interest?

    I apologise if this may come across as a stupid idea (or it may be possible), at the moment I don't know.

    Been thinking about this for awhile so here it is, hoping to get some advice.

    More info: If I go ahead I will be investing through a discretionary family trust.