Browse Forums Home Finance 1 Mar 03, 2013 12:10 pm Hello, We are living in property and planning to rent it out once we find a new big house. We manage to pay "an extra 100K" to my Prime Residence Property loan account as of today. Even if you withdraw the money from the account and put it into your new property loan won't help us increase tax benefit when you rent out the current PRP. I heard when you rent out current PRP "extra you paid and withdraw money wont be claimable in tax". Is it true? If we do "refinance" now, we may be able to get an 200K from this account if we can make it 100% property loan on a mortgage insurance. This increases my tax benefits and reduce burden on PRP. New account should be an off set account. We know interest incurred on an off set account is taxable. thanks, Bobs007 Re: CGT, Offset account and Tax 2Mar 03, 2013 1:18 pm In hindsight you should have put the extra money into an offset account, thus saving you interest. Then you can legally pull the monery out and the whole loan is tax deductable. You can't refinance and just make it higher. Well you can but it's not legal to claim it all as tax deductable. People do though if you don't mind risking being audited. A friend of mine did that. Accountant said they'll never check??? When determining tax deductability you need to look at what was bought with the money. So if you increase the IP loan to give you more money to buy a private home then technicallky the extra has NOT been spent on an investment so therefore is not tax deductable. Re: CGT, Offset account and Tax 3Mar 03, 2013 5:11 pm This is the biggest mistake potential investors make and is a prime example of why an offset account should be used over a redraw every day of the week. You still pay the same reduced amount of interest but are able to use the funds in the offset without effecting any deductibility down the track as an offset account is not a loan account. The deductibility of the loan is determined by the purpose of what the borrowed funds will be used for. So if you are withdrawing the redraw money for the new PPOR, it's not deductible. Same with refinancing for the extra $200K (well less because you can't borrow 100% of the property value). Doesn't matter if its refinanced on the investment property, if those cashout funds are used for the PPOR, it's not deductible. The only thing that might work if you are married is a spousal transfer, but it might cost too much to do and might not be worth it. travelbug You can't refinance and just make it higher. Well you can but it's not legal to claim it all as tax deductable. People do though if you don't mind risking being audited. A friend of mine did that. Accountant said they'll never check??? All very well for the accountant to say as you sign the waiver that they aren't liable if you get audited and found out. Re: CGT, Offset account and Tax 5Mar 04, 2013 4:25 pm bobs007 Thanks!! Well said. "spousal transfer". Already it is on both us "name"!!! You are still able to transfer the remaining 50% into the other persons name through a spousal transfer. Re: CGT, Offset account and Tax 6Mar 04, 2013 5:20 pm plc travelbug You can't refinance and just make it higher. Well you can but it's not legal to claim it all as tax deductable. People do though if you don't mind risking being audited. A friend of mine did that. Accountant said they'll never check??? All very well for the accountant to say as you sign the waiver that they aren't liable if you get audited and found out. Still. I was surprised an accountant would say that. It seems very clear to me that your contract states that a security account does NOT need to be established so the answer to the builder is NO. If in doubt find a contract… 1 6361 Yes, I had already tried searching those. In the end I am fabricating my own. 4 2204 the exemption applies only to your principal place of residence - so you must live in it. The 200 days is continuous. You also have to apply for the exemption. 2 11112 |