Paying off mortgage on property held in LAQC
Question from speegles updated on 4th October 2006:
Our expert responded:
If you go down this path, it is a great idea to pay off the mortgage as the interest will no longer be tax deductible. And you’re right all expenses incurred such as repairs and maintenance costs, insurance, rates and so on in relation to this property will not be tax deductible any longer. However, there are some other issues to consider such as transferring the property into a family trust, especially if you are using personal funds to reduce the mortgage and you do not expect that the property will be rented out in future. There are obviously some administration issues to consider and if you do decide to keep the property in the company, you should pay all expenses in relation to this property from your personal bank account rather than the company’s bank account. When you are a shareholder employee there may also be a FBT impact, so please discuss this with your accountant.
Kenina Court is a director of Acorn Solutions Limited, an accounting firm dedicated to working with clients to help them create wealth. She is an avid property investor, entrepreneur and seminar presenter on asset protection and wealth strategies.