Lending Structures

How you structure your lending can make all the difference when it comes to asset protection and maximising tax savings, particularly those with investment loans those in business.

Last week I spoke with a lovely couple, Dr Steve & Dr May, who have a home loan with a stack of cash in their offset account (it’s shown as red because the interest is not tax-deductible).

The reason there’s a green but is because $100,000 of their home loan was used to purchase equipment for their business.

Then, last year they purchased an investment property for $1,000,000, so they borrowed 104% of the purchase price (as they should) and hence have a green (tax-deductible) investment loan of $1,040,000.

Lending structures chart Australia

A refinance of their lending is critical to get the structure right at the same time. For the purpose of asset protection and tax minimisation, they should really have 6 loan splits.

And they’ll get better rates and $6,000 in refinance rebates!