When managing multiple properties, understanding the tax implications of using redraw facilities is crucial. In this article, we’ll delve into the complexities and potential tax pitfalls associated with redraw facilities and why making informed choices is vital for property owners.
Redraw Facilities and Capital Gains Tax (CGT)
Interest Deductibility: In Australia, interest on loans for income-producing properties is typically tax-deductible. However, mixing personal and investment redraws can complicate the ability to claim interest as a tax deduction. Keeping clear records is essential for tax compliance.
Asset Mixing: Redrawing funds across different properties can blur the lines between personal and investment assets. This complexity can make it challenging to separate your financial affairs for tax purposes and may lead to unexpected tax liabilities.
For more information, read our other article for a broader understanding of the differences between offset and redraw accounts.
In summary, while redraw facilities can be valuable, especially for property owners with multiple holdings, the tax implications are not to be taken lightly. Mixing personal and investment redraws can lead to unexpected tax complications. It’s essential to seek guidance from experts like Simplify Finance to navigate these complexities and structure your finances wisely.
Still have questions about this? Book a call with us today to ensure you’re making the right financial choices for your property portfolio.