I would really appreciate peoples thoughts and experiences on this.
I currently have a home loan with an offset account that is in joint names (wife & I). The home loan is p&i. The offset account has some extra $$ that I am thinking of taking out and investing in shares in my wifes name only. I have a few general questions relating to this:
1. For the amount that is taken from the offset account that is invested in income producing shares i.e. dividends are received, can the interest on this be claimed as a tax deduction?
2. If it can be claimed as a tax deduction can it be claimed solely on her tax return. Investments will be in her name, but the offset account is in a join name.
3. Since the home loan is p&i - I will be making ongoing payments that will be reducing the principal. I assume when calculating the interest on the portion borrowed for tax deduction purposes you would have to take this into consideration?
4. The bank can also offer creating a new interest only loan, in my wife's name only, with the house as security. This would obviously be easiest for taxation purposes, but the interest rate is 0.1% higher than the current home loan.