Hi all,
I have a PPoR with offset facility interest only at 80% LVR. I did this because I thought it would be wise to keep the LVR high so when I move to another PPoR in a few years time, I can just rent this house out with maximum tax deductible debt.
First year investing and up to my third IP so far. What I did for these properties was to borrow 95% and paid the rest 5% + purchasing cost using money in the offset. The money that I am using in the offset comes with an opportunity cost which is paying more non deductible interest in my PPoR.
However, I came to realise recently that maybe it is wiser to use the money in the offset and pay down the loan to 75% lvr (or less) and create a split loan so that the whole loan (105%) is tax deductible. This will make PPoR back to 80% and basically change a non tax deductible saving(from offset) to tax deductible loan.
Can you find any fault in the above method? Any feedback is appreciated.
I have a PPoR with offset facility interest only at 80% LVR. I did this because I thought it would be wise to keep the LVR high so when I move to another PPoR in a few years time, I can just rent this house out with maximum tax deductible debt.
First year investing and up to my third IP so far. What I did for these properties was to borrow 95% and paid the rest 5% + purchasing cost using money in the offset. The money that I am using in the offset comes with an opportunity cost which is paying more non deductible interest in my PPoR.
However, I came to realise recently that maybe it is wiser to use the money in the offset and pay down the loan to 75% lvr (or less) and create a split loan so that the whole loan (105%) is tax deductible. This will make PPoR back to 80% and basically change a non tax deductible saving(from offset) to tax deductible loan.
Can you find any fault in the above method? Any feedback is appreciated.