Optimise the way your property debt is structured

Optimise the way your property debt is structured
Optimise the way your property debt is structured

Optimise the way your property debt is structured


Property owners can claim a tax deduction for interest paid on a loan used to buy an investment property, but not on a mortgage used to buy their own home.

Boutique lender CSC Home Loans has developed Mortgage Down to help investors maximise tax deductions and minimise non-tax deductable interest by optimising the way their property debt is structured.

“Mortgage Down allows the property investor to pay off their home loan sooner and create equity in their own home faster. This gives the property owner more opportunity to create additional investments,” says Mortgage Down group marketing director Venn Williams.

Under a tax ruling from the Australian Taxation Office PR2015/2, the loan structure allows investors to reduce the interest rate on their non-deductable principal and interest home loan and increase the interest rate on their deductable interest-only investment loan.

“If you own your own home and have an investment property, then you could qualify for a home loan rate beginning with a 2,” Williams says.

The average interest rate for a standard variable owner-occupied mortgage from a bank was 5.4 percent in May 2016, according to the Reserve Bank of Australia.

A 1 percent reduction in the interest rate charged on a $250,000 home loan taken over 25 years would save the borrower $43,468 over loan’s term and cut the time to repay the debt by 4 years. A 2 percent drop in the rate would save $84,640 and let the borrower repay the loan 6 and a half years sooner.

The higher interest rate charged on the investment loan means the investor may be able to claim a larger tax deduction.

The innovative loan structure is available to Australian residents who own their home and either already have an investment property or are about to buy one.

The product offers other features such as an o set account, redraw facilities and debit cards. Usual borrowing conditions apply. 

To download a free ebook on new financial year taxation tips for property investors, click here.


Mortgage Rate Property Debt

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