{"id":9559,"date":"2016-10-07T09:35:35","date_gmt":"2016-10-06T22:35:35","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=9559"},"modified":"2016-10-07T09:35:35","modified_gmt":"2016-10-06T22:35:35","slug":"avoid-the-most-common-financial-mistake-made-with-a-line-of-credit","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/","title":{"rendered":"Avoid the Most Common Financial Mistake Made with a Line of Credit"},"content":{"rendered":"

 
\nThere is a critical mistake made by many people who have lines of credit and who have investment properties.<\/strong>
\nThis mistake is common and you\u2019ve got to be aware of it, because it\u2019s costly to fix up.<\/p>\n

Now, I assume you know what a line of credit is<\/h3>\n

A line of credit is like a big credit card.
\nThe banks give you approval for a limit on how much you can spend, and you can spend it anywhere you want.
\nYou can even use it to pay the interest on the line of credit itself.
\nLet\u2019s imagine someone gets a line of credit of $100,000, and they\u2019ve used that $100,000 as the 20% deposit to purchase a property.
\nSo it\u2019s a now business expense.
\nIt\u2019s tax-deductible.
\nThe interest on that loan is a tax deduction, because the money went towards the investment property.<\/p>\n

Here\u2019s where they make a mistake\u2026<\/strong><\/h3>\n

They put their wages into that line of credit, because their bank or their broker says, \u201cIt\u2019s a great idea, because it will save you interest.\u201d
\nIsn\u2019t that what most people are told?
\nMany people are also told to get a \u201ccredit card\u201d and put all of their expenses on it, then pay it off once a month.
\nSo you\u2019ve got your wages sitting in your line of credit, earning you interest and then you put all your expenses on your credit card.
\nThis gives you 55 days interest free, and on the 54th day or 55th day, you transfer the money from your line of credit and pay down your credit card.
\nThe problem with that is you just changed the purpose of your loan.
\nThe original purpose of the loan was a tax deduction.
\nOkay.\u00a0Let\u2019s say over 12 months you put your wages into your line of credit.\u00a0 And let\u2019s say your wages came to $50,000.<\/p>\n

Let\u2019s look at the big picture here\u2026<\/strong><\/h3>\n

You\u2019ve reduced your line of credit down to $50,000, and let\u2019s assume over 12 months your credit card payments totalled $50,000.
\nOnce you pay this off, your line of credit is now back up to $100,000.
\nBut you saved the interest on that $50,000 whilst your money is sitting in the line of credit which is now back up to $100,000.
\nNow, can you see that this money here is private?
\nCan you see that you\u2019ve just changed the purpose of your loan?
\nThe tax department looks at where your money went to and the purpose of that loan.
\nEven though your $100,000 liability is still there and you\u2019re claiming 100% of the interest; here you can only claim 50% of it.
\nAnd to make things worse, your accountant will probably spend $2,000 in trying to work out all the little bits and pieces going back and forth in the last 12 months.
\nDoes that make sense?
\nYou need to be very careful with this.<\/p>\n

So what should you do?<\/strong><\/h3>\n

Have two lines of credit.
\nFor example, if you have a business or an investment line of credit, and that\u2019s $100,000, you don\u2019t touch that. You leave it alone.
\nYou might also have a private line of credit for your private mortgage, and it might also for $100,000.
\nThis is where you put your wages into and you pay your credit cards from.
\n 
\n\u00a0Ed Chan<\/a><\/em>
\n<\/em>\"ed-chan-newsletter-banner-e1467260910215\"<\/a>
\nEd is a founding partner of Chan and Naylor accountants and a leading property tax specialist. He has co-authored 3 best selling books. As a seasoned property investor he shares his unique understanding of the relationship between property investment and tax. Visit www.Chan-Naylor.com.au<\/a><\/em>
\n\"CTA<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

  There is a critical mistake made by many people who have lines of credit and who have investment properties. This mistake is common and you\u2019ve got to be aware of it, because it\u2019s costly to fix up. Now, I assume you know what a…<\/p>\n","protected":false},"author":176692471,"featured_media":7194,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[34,17,25],"tags":[86],"class_list":["post-9559","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-topic","category-property-investment","category-sponsored-channels","tag-line-of-credit"],"yoast_head":"\nAvoid the Most Common Financial Mistake Made with a Line of Credit - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Avoid the Most Common Financial Mistake Made with a Line of Credit - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  There is a critical mistake made by many people who have lines of credit and who have investment properties. This mistake is common and you\u2019ve got to be aware of it, because it\u2019s costly to fix up. Now, I assume you know what a...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/\" \/>\n<meta property=\"og:site_name\" content=\"Realty Talk\" \/>\n<meta property=\"article:published_time\" content=\"2016-10-06T22:35:35+00:00\" \/>\n<meta name=\"author\" content=\"rolanrush\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rolanrush\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/\"},\"author\":{\"name\":\"rolanrush\",\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"headline\":\"Avoid the Most Common Financial Mistake Made with a Line of Credit\",\"datePublished\":\"2016-10-06T22:35:35+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/\"},\"wordCount\":609,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#primaryimage\"},\"thumbnailUrl\":\"\",\"keywords\":[\"line of credit\"],\"articleSection\":[\"Finance\",\"Property Investment Topics\",\"Sponsored Channels\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/\",\"url\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/\",\"name\":\"Avoid the Most Common Financial Mistake Made with a Line of Credit - Realty Talk\",\"isPartOf\":{\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#primaryimage\"},\"thumbnailUrl\":\"\",\"datePublished\":\"2016-10-06T22:35:35+00:00\",\"author\":{\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d\"},\"breadcrumb\":{\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#primaryimage\",\"url\":\"\",\"contentUrl\":\"\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/channels.realty.com.au\/realtytalk\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Avoid the Most Common Financial Mistake Made with a Line of Credit\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/#website\",\"url\":\"https:\/\/channels.realty.com.au\/realtytalk\/\",\"name\":\"Realty Talk\",\"description\":\"Your Trusted Voice For Property Investing. Anywhere, Anytime.\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/channels.realty.com.au\/realtytalk\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d\",\"name\":\"rolanrush\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g\",\"caption\":\"rolanrush\"},\"url\":\"https:\/\/channels.realty.com.au\/realtytalk\/author\/rolanrush\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Avoid the Most Common Financial Mistake Made with a Line of Credit - Realty Talk","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/","og_locale":"en_US","og_type":"article","og_title":"Avoid the Most Common Financial Mistake Made with a Line of Credit - Realty Talk","og_description":"  There is a critical mistake made by many people who have lines of credit and who have investment properties. This mistake is common and you\u2019ve got to be aware of it, because it\u2019s costly to fix up. Now, I assume you know what a...","og_url":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/","og_site_name":"Realty Talk","article_published_time":"2016-10-06T22:35:35+00:00","author":"rolanrush","twitter_card":"summary_large_image","twitter_misc":{"Written by":"rolanrush","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#article","isPartOf":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/"},"author":{"name":"rolanrush","@id":"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d"},"headline":"Avoid the Most Common Financial Mistake Made with a Line of Credit","datePublished":"2016-10-06T22:35:35+00:00","mainEntityOfPage":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/"},"wordCount":609,"commentCount":0,"image":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#primaryimage"},"thumbnailUrl":"","keywords":["line of credit"],"articleSection":["Finance","Property Investment Topics","Sponsored Channels"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#respond"]}]},{"@type":"WebPage","@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/","url":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/","name":"Avoid the Most Common Financial Mistake Made with a Line of Credit - Realty Talk","isPartOf":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/#website"},"primaryImageOfPage":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#primaryimage"},"image":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#primaryimage"},"thumbnailUrl":"","datePublished":"2016-10-06T22:35:35+00:00","author":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d"},"breadcrumb":{"@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#primaryimage","url":"","contentUrl":""},{"@type":"BreadcrumbList","@id":"https:\/\/channels.realty.com.au\/realtytalk\/avoid-the-most-common-financial-mistake-made-with-a-line-of-credit\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/channels.realty.com.au\/realtytalk\/"},{"@type":"ListItem","position":2,"name":"Avoid the Most Common Financial Mistake Made with a Line of Credit"}]},{"@type":"WebSite","@id":"https:\/\/channels.realty.com.au\/realtytalk\/#website","url":"https:\/\/channels.realty.com.au\/realtytalk\/","name":"Realty Talk","description":"Your Trusted Voice For Property Investing. Anywhere, Anytime.","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/channels.realty.com.au\/realtytalk\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/channels.realty.com.au\/realtytalk\/#\/schema\/person\/384a57ac9e52cb9bf19896cb15eaa52d","name":"rolanrush","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/86544778804295a7fa45cbde097dc3a58a45ba6ed28859f17059ca74c38723d2?s=96&d=mm&r=g","caption":"rolanrush"},"url":"https:\/\/channels.realty.com.au\/realtytalk\/author\/rolanrush\/"}]}},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/posts\/9559","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/users\/176692471"}],"replies":[{"embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/comments?post=9559"}],"version-history":[{"count":0,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/posts\/9559\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/media?parent=9559"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/categories?post=9559"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/channels.realty.com.au\/realtytalk\/wp-json\/wp\/v2\/tags?post=9559"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}