Your Investment Property forum is the place for positive industry interaction and welcomes your professional and informed opinion.

interest payments for investment loan from PPOR offset.

Notify me of new replies via email
Ravi Gupta | 15 Feb 2016, 08:40 AM Agree 0

I recently got valuation done for my ppor and got equity into a separate loan account that has a new offset attached to it.
Can I make interest payments from oopr_offset instead of new offset for my investment loans(and new equity loan) and still have all interest payment tax deductible?

Complete scenario described below:

I have a PPOR and and offset attached to it. I recently bought an IP and planning to buy more in near future.

Initially I had this:
ppor_loan = 378k
ppor_offset = 200k (salary goes here and all personal expenses from here.)

I revalued my ppor and put equity into another loan account with a new offset attached to it. let's call it investment_loan(I will make sure I won't use it for non-investment purpose.)

ppor_loan = 378k
ppor_offset = 200k
investment_loan = 118k
investment_offset = 118k

Then I bought an IP and paid initial deposit(105k) from investment_offset. New accounts look like below. All loans are IO.

ppor_loan = 378k
ppor_offset = 200k (salary & rent goes here and all personal expenses from here.)

investment_loan = 118k
investment_offset = 13k (future IPs expenses to be done from here)
ip_loan = 512k

Q1: Can I make interest payment for investment_loan & ip_loan from ppor_offset (instead of investment_offset) and still make both interests paid fully tax deductible ? Can interest debited from ppor_offset for investment loans cause contamination?

I don't want bank to deduct any money from investment_offset because of following reason:
As some equity has build up in IP1 I am planning to get bank valuation done and have bank increase investment_loan by X and investment_offset increase by X.
So, when I buy another IP2 in future I can pay initial deposit+expenses from investment_offset and still have interest paid on investment_loan fully tax deductible.

Q2. Is my strategy correct? In future I will pay all IP 1 & IP2 expenses from investment_offset while all incomes (salary, rents from ip1 & ip2) will go in ppor_offset.

Thanks for your kind help.

Post a reply