Q
My wife and I recently renovated
our investment property and
moved in. There is an interest-
only loan of $545,000 in my name on our
new residence. The investment property
where we used to live is in my wife’s name
and has an interest-only loan of $245,000
on it. Both loans have offset accounts. We
extended the loans to renovate and have
a large balance of about $170,000 in my
wife’s offset.
My home loan adviser has suggested
we transfer the large balance to my
offset to reduce the non-deductible
interest payable and pay down the loan
faster, and also to change my loan to
principal and interest instead of interest
only and to keep my wife’s loan as interestWarwickis lookingforthebestwayto ...
Pay off property debt
only to maximise the tax
deduction. How much money
should I leave in my wife’s
offset? Is there anything else
you would suggest to pay off
the loans?Warwick, that all sounds sensible
to me. Keeping the investment
property to interest only is techni-
cally correct. But it is important to
take the savings from the lower inter-
est-only repayments and add themtoyour
non-deductible repayments.
The first rule here is to pay as muchas
possible into your non-deductible loan and
keep the tax-deductible debt at its current
level via an interest-only loan. The second ruleis also really important: make sure you have a
super-competitive interest rate on both loans.#AUZMINES