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Most liked posts in thread: Using line of credit to invest in shares: tax question

  1. investtrader

    investtrader

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    Since I happen to have had a tax qualification as tax agent since 1982 ... and accounting degree along with masters ... you may think what you like. The deductibility of a residential home loan.... loan against your residence is NOT tax deductible.""

    I said an equity loan or line of credit or whatever you want to call it. The purpose of the loan is relevant, NOT the security used. Many small businesses have their home used as collateral, for example.
     
  2. HelloU

    HelloU

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    Be aware that if you do a redraw on an existing home loan (ie, non tax deductible loan), and use the redrawn money for investing purposes, then the interest paid on the redrawn part becomes tax deductable from the perspective of the taxation office. (refer ATO tax ruling TR2000/2)
     
  3. Austwide

    Austwide

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    The way I see it

    The loan must only be used for investments and can not used for a mix of personnel and investing without becoming inefficient tax wise.

    Tax wise I see no differences, tax credits don't change either way.

    The divs received are like getting extra cash, so if you buy more shares(DRIP) or reduce the loan is up to you.
     
    barney, Some Guy and Knobby22 like this.
  4. kahuna1

    kahuna1

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    NO answer even close ....
    GO and see an accountant or certified financial planner.
    Its complex is the answer ...

    could be one of 50 answers.

    Are you working ? Do you have a SMSF
    IT could be margin leverage on the LIC is the go ...
    if you in drawdown of near that of pension side another answer ..

    Obvious question neither will ask is are you mad ?
    Going leveraged at all time highs ? I thought one bought LOW and sold high not the opposite.

    Tax effective of say salary sacrifice at top end marginal rate and paying a mere 15% adding to a SMSF or even better one that is done via one of the industry funds where you can hold shares. Problem of course being getting leveraged.

    Not paying 30% MORE effective tax and salary sacrifice is of course the best way ...

    I could go on but ... well ... go see a really good planner ... or great accountant which is rare in both cases, Most are hacks and dont use bank ones or linked to any fund.
     
    frugal.rock, qldfrog and fergee like this.
  5. investtrader

    investtrader

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    ... for the simple reason that funds become totally co-mingled and over time the lines become blurred totally."

    Kahuna1 , with due respect you are not really sounding like you actually have experience in this area. It is just a basic requirement that the loan is used solely for investment purposes. Easy to audit. Most banks have a facility to split accounts so you can do this within the one line of credit.
     
    Knobby22, cropcos and sptrawler like this.
  6. Value Hunter

    Value Hunter

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    Generally speaking with interest rates on property loans being as low as they are and dividend yields on shares still being pretty solid it most cases it will end up making more sense to participate in a DRP (or use dividends to buy shares on market) compared to using dividends to pay down a loan. Of course it depends on the exact interest rate on your particular loan and the dividend yield on your share portfolio but in most cases what I said will be true.
     
    Some Guy and frugal.rock like this.
  7. kahuna1

    kahuna1

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    Since I happen to have had a tax qualification as tax agent since 1982 ... and accounting degree along with masters ... you may think what you like. The deductibility of a residential home loan.... loan against your residence is NOT tax deductible.
     
    fergee and frugal.rock like this.