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.
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!