Tax Minimistaion Strategy #7 – Offset accounts against loans – when requiring personal funds in future
Tax Minimistaion Strategy #7 – Offset accounts against loans – when requiring personal funds in future
If you have some savings that you are planning to use personally in the future, in the meantime, you could use these savings to offset against loans you may have. Preferably it should be offset against personal or home loans first, and then against tax deductible investment or business loans which are at the highest interest rates.
This way, when you go to use the funds, the original loans for tax deductible purposes have not been reduced, so it’s still maximises the tax deductible portion of the loan. This strategy can also be used if you are considering using your own home as a rental property in the future – so don’t pay off the home loan, but have savings offsetting the loan interest, so when it becomes a rental loan, the loan is at its maximum level.