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using offset/redraw against PPOR loan

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Newbie

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Hi,

 

I have a question that I have asked several tax accountants that has resulted in multiple answer of yes/no, hoping someone can clear it up here for me.

 

I was told by a coworker that if I moved my "extra" money from my offset acct (attached to my PPOR home loan) to my PPOR home loan, and then redraw that amount to invest in shares, I can apportion that amount to reducing income tax. ie $400k PPOR home loan and $100K in offset (and I was going to invest in shares anyway). This $100k portion could be used to offset income tax as it's used an investment.

Does this sound like a scheme? Or is it perfectly legal, as long as it is clearly delineated to being for an investment?

 

Thanks

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Community Support

Replies 3

Hi @Scottnothin82,

 

Thank you for reaching out to us. If you use money from a loan to produce assessable income then you can claim the interest portion as a deduction. If any amount is being used for private purposes you can only claim deductions on the portion being used to produce assessable income. Effectively it is what the money is being used for if you want to claim interest expenses.

 

The website advises - You can claim a deduction for interest charged on money borrowed to buy shares and other related investments that you derive assessable interest or dividend income from.

Only interest expenses incurred for an income-producing purpose are deductible.

If you used the money you borrowed for both private and income-producing purposes, you must apportion the interest between each purpose.

 

Hope this helps.

 

Regards,

Jodie2.

4 REPLIES 4
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Best answer

Community Support

Replies 3

Hi @Scottnothin82,

 

Thank you for reaching out to us. If you use money from a loan to produce assessable income then you can claim the interest portion as a deduction. If any amount is being used for private purposes you can only claim deductions on the portion being used to produce assessable income. Effectively it is what the money is being used for if you want to claim interest expenses.

 

The website advises - You can claim a deduction for interest charged on money borrowed to buy shares and other related investments that you derive assessable interest or dividend income from.

Only interest expenses incurred for an income-producing purpose are deductible.

If you used the money you borrowed for both private and income-producing purposes, you must apportion the interest between each purpose.

 

Hope this helps.

 

Regards,

Jodie2.

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Newbie

Replies 0

Thanks for your response Jodie2.
Just so I'm clear on this:
If I have a home loan of $400k, with $100k in the offset, I can transfer that money into my home loan, then "redraw" the funds with which I will invest in shares.
As long as I show the money transferred in, then out (and it clearly shows its going to an investment), I can claim that portion of interest as an income tax deduction?
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Newbie

Replies 1

Thanks for your response Jodie2.
Just so I'm clear on this:
If I have a home loan of $400k, with $100k in the offset, I can transfer that money into my home loan, then "redraw" the funds with which I will invest in shares.
As long as I show the money transferred in, then out (and it clearly shows its going to an investment), I can claim that portion of interest as an income tax deduction?
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Community Support

Replies 0

Hi @Scottnothin82

 

The information on our website as Jodie2 detailed allows you to take out a loan for investments then claim the interest. In this instance you are taking out the loan from your offset account. Should you be asked to substantiate the claim you may wish to make sure you hold clear documentation as to what you have done, when and how it was used and the interest and repayments proportioned accordingly.

 

MarkATO