RESI relaunches tax effective split loan

RESI Mortgage has relaunched its tax-effective split-loan for property investors following a recent Federal Court ruling allowing the tax benefits on such loans. Such loans effectively enable borrowers to claim tax deductions for interest when financing their own home.

One loan is split across two properties – the borrower’s own home and their investment property. Instead of paying off both properties borrowers direct all repayments towards their home, for which interest is not tax deductible. Meanwhile interest compounds on the investment property but interest payments are tax deductible.

RESI says the results sees paying off their home in as little as 6 to 8 years while increasing their tax deductions by hundreds of thousands of dollars. RESI’s Wealth Maximiser offers an interest rate of 6.25 per cent undercutting the average bank standard variable interest rate by 0.32 percentage points.

The Australian Tax Office had originally ruled against these tax benefits and has sought leave to appeal to the High Court about the Federal Court ruling. Customers are advised to obtain their own legal and taxation advice on the suitability of such loans.

Specialist lender New-Loan launched its similar Tax-Smart All-In-One Loan in August after the court ruling.