Stock Accounts and Mortgage Currently Disjointed. Shall I Use Redraw Strategy?

arkhos on 22/09/2024 - 01:28
Last edited 22/09/2024 - 10:44 by 1 other user

I have around 200k in stocks with ibkr and a mortgage for 489k with Macquarie. The two things are currently separate objects. Hence shock on either side doesn't directly affect the other compartment.

The mortgage is for a property I am renting out at 60%. Hence, mortgage is deducted at 60%

I am thinking about the risks of closing my stock positions, paying CGT (I have some losses under the belt to pair about 50 percent of the capital gains), split my mortgage into 200k / 289k, kill the 200k component, redraw and reinvest.

If I understand, this would send up deductability from 60% to 76%. Is that right?

What are the risks of shifting to this setup?

And, laterally, could I do redrawing for buying goods linked to the invested portion of the property, like buying a bed or a sofa?

thanks guys

Financial Home Loan Loan

Comments

  • theHMASfriendship on 22/09/2024 - 08:15
    +6

    I think you should invest in yourself. Perhaps a new neat hat. You’ll feel a million dollars 🎩

  • onetwothreefour on 22/09/2024 - 08:31
    +3

    What did your accountant say?

  • SBOB on 22/09/2024 - 08:33
    +2

    The mortgage is for a property I am renting out at 60%. Hence, mortgage is deducted at 60%

    As in the property you live in(ppor), you're renting out a portion and claiming that portion of your mortgage on tax?
    Hope you've got a good accountant to help you work out the capital gains you'll be paying on a significant portion of your ppor in the future if that's the case.

    As for your other question, yes, but you'd want to make sure you keep those two loans very seperate so the $200k for shares can be clearly shown to be sourced from that loan. The source of income (ie dividends from.shares) can then be shown it was from that loan, making that a deductible expense. You would 100% not want to be buying items for your house from that $200k loan.

    Based on your questions I think an accountant would be a wise first point of discussion though.
    Debt recycling is the phrase you're looking for.

  • arkhos on 22/09/2024 - 10:56

    Thank you, great comment. I will definitely get in touch with a cognizant accountant and explain the problem, but I wanted to get an idea of the process to begin with. It looks linear and rational, but I don't understand why I should not use the redraw facility for buying items for the rented portion of the property: is that due to the capital nature of the purchases?
    Also, what could the risks of embracing the debt recycling strategy be? I understand the strategy increases exposure risk when investment funds are taken from deterministic sources, but in this case, everything is invested already. Hence I see only benefits from it
    Thanks

    • Eeples on 22/09/2024 - 15:43

      Are you using a translator?

      • arkhos on 22/09/2024 - 16:53

        I speak 4 languages and English is not my primary one

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