Current loan is for $645,000
Offset account has $130,000 sitting in it
Want to invest in property and have the most tax effect loan structure.
If you are going and use the deposit from your own funds (offset account) you will not be able to claim a tax deduction on these funds. However if you change how your loans are set up then we can make the deposit tax deductible and reduce your owner occupier loan at the same time.
What I’m recommending is that you reduce your current owner occupied loan to $545,000 reducing it by $100,000. (Cash you have in your offset account). This is great as it is paying off owner occupier debt. However we then draw out a new loan for $100,000 which its sole purpose is to fund deposits for investment property and cover if there is any short fall on the properties repayments. So we still have the same total lending amounts $545,000 & $100,000 = $645,000.
This would still leave $30,000 in your offset account to give you a manageable buffer, therefore reducing the repayment in the interest to only $515,000 so long as you still have $30,000 left in the offset account or more. Your payments for the owner occupier loan should be the same as what they currently are with the $130,000 sitting in the offset account.
What then happens is you now have a $100,000 investment loan that is available for draw down and deposit on the new investment property and when you draw this down the interest associated to this loan is 100% tax deductible against the investment property you are going to buy. You can only use this loan for investments.
Please note I am not an accountant and are not giving you taxation advice. I do however have an understanding of the tax system and how it works but I do recommend you talk to your tax agent to get the final ruling.