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Hi,
I have a joint home loan with my wife Of 400k that is linked to a offset account with 400k in it. My wife is not working now due to pregnancy and will not be working for a number of years.
We would like to purchase some shares in her name (because of her now low income) around 150k worth. Can she claim the interest on the 150k taken from the offset account. Can she claim all interest keeping in mind homeloan and offset are joint? someone mentioned me lending her the money? Loan structure?

3 years ago
Comments

The best steps would be to set up 2 loans or split this one and have the home loan limit reduced to 250k and the second 150k split used for the shares. It clearly separates the debt and purposes and would allow the interest costs to be a deduction for your wife.
Give me a buzz if you need a hand to set up.
As you are now having a family and have a few finance moving parts, good time to review your insurance and estate planning needs, we can do all this and more at Announcer.
cheers
Chris

Responses

Peter. Hi there. This is definitely one that needs tax advice, have a chat to an Accountant, but I suggest you consider a Margin Loan in your wife's name that could be funded from your offset account with a much smaller amount.
Hope this helps
Ken Olds
Mortgage Broker
1309 ASK KEN

3 years ago

Hi Ken, thanks for your input. I would prefer to use the home loan interest rate as it is a lot lower than margin loan

3 years ago

I found my account was guessing answers when talking to him about it. I'm looking for a new accountant who is up to speed with this type of setup.

Comments

Peter, a bit of a tough one, but I think the issue you will face is that by drawing from the offset account, you are really investing your own money. No real borrowing at all that will provide a tax deduction.
Perhaps you could apply to your Lender for an additional loan split for the specific purpose of future investment.
You will still need some advice whether this is 50 or 100 percent deductible, however I could speak to you about Lenders that will do it at Owner Occupied rates
Give me a call if in need
Regards
Ken

Hi Peter.
Again, I'm not a tax agent however in order to claim the interest I believe that it must be new borrowing for the specific purpose. In that case it may be possible, depending on your income and overall serviceability to take out a new loan for the shares which would then be tax deductible.
I would also recommend speaking with a financial planner to discuss the strategy you are choosing and make sure you have looked at it from all directions
Good luck with the investment
Regards
Scott

3 years ago

Hi Scott, thanks for your input,
I have kept the question pretty simple not exact figures etc. thank you for your concern with my investment statergy. I have been trading shares for over 20 years. I have had countless margin loans hence having 400k to play with.
I was told I could do this many years ago by my old old accountant but did not go into details and had no wife at the time.
Thanks again,
Peter

3 years ago

Hi Ken, thanks again, I will keep in mind the loan split, great advise mate.

Hi Peter,
The issue you face as I see it is you (or your wife) will need to incur interest in order to claim that interest. Using your own money in the bank (offset account) is not incurring interest on that money. One suggestion may be to actually pay off part of your loan with the money in your offset account, then borrow for your wife to buy the shares. You can then establish a trail of borrowing to acquire an income producing asset. Interest is then deductible. Good luck with it.

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