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Q:

Hi,
My Wife and I have a 75k mortgage. we have an equity loan facility that is split from this mortgage of 400k.
we would like to invest in some shares using funds from equity loan.
We would like to set it up so my wife is buying the shares as she has recently delivered our baby and won’t be returning to work for around 5 years.
Can she negative gear the interest against dividend income from the equity loan keeping in mind it’s in both our names?

2 weeks ago

Responses

Hello Peter,

have you considered that your wife will have no tax benefit from the negative gearing whilst she is not working?

The flip side to that is that should she make any gains or profit on sale of shares you wont have to share the tax burden at your (presumably) higher marginal tax rate.

Are you planning on a passive investment portfolio, or an active share trading business?? This will have tax consequences on what you do....

What happens in 5 years?? the shares will STILL be in her name so the income will STILL stream to her.....

Is there an opportunity to hold these investments in some sort of structure that allows for the income and gains to be streamed to whoever will have the lowest tax rate??? (yes you can)

I would say you need to get a whole heap of advice on the pros and cons of doing what you are doing how you plan to do it, THEN rip into the share market like a crazy thing:)

get yourself in front of a PROPERLY QUALIFIED AND EXPERIENCED accountant who can advise you on tax and help you to plan this venture out over 20-30 years to ensure you dont shoot yourself in the foot by accident in a decade or so. DONT go to someone who purports to be an expert in something without some REAL qualifications and experience.

regards
Brendan

2 weeks ago

Hi Brendan,

Thanks for your reply
we are looking at a medium to long term high yielding(larger dividends)investment portfolio. I have been trading stocks for 25 years ,had countless margin loans, and have sratergy that has worked for us for the last 20 years,

I’m trying to take advantage of the lower interest rate that the equity loan has over margin lending.

You are right, I have had three accountants now that are very good a some things but are not up to scratch in these type of arrangements .
Would you be able to steer me to someone on the central coast that is good in this area and or where in Newcastle is your office? Happy to travel up if you are experienced in what I’m trying to accomplish (sounds like you are).

The main question I really need an answer is would it be possible to claim the interest against high yielding dividends from a portfolio if I kept the statements neat/clean for the ato ?

Keeping in mind stocks will be bought in my wife’s name and the equity loan is in both our names

Brendan if you are happy to see me let me know how to contact you to make an appointment.

Cheers

Hi mate, I have an office on the Central coast too!!! google us up: BPC Accounting Chartered Accountants. 02 4399 1833 or hit the "contact expert" thing below and I will get back to you:)

happy to chat

regards

Brendan

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