Offset accounts How to use an offset account to manage your investment property income and expenses

Casey Healey and Nick Ball - Mortgage Broker - Inovayt Finance break down Offset Accounts ????????????

Watch now to see how you can:

✅ Streamline your rental income.

✅ Make preparing for tax time easy.

✅ Minimise your interest payable.

Transcript:

- Casey Hailey. Director here at "Century 21" and Nick Ball joins me from "Innovate Finance." Thanks for coming, Nick.

- Thanks Casey.

- Today we're talking offset accounts. Are they still available? Do they come as part of your home loan package and how's the best way to use them to really maximize tax make things simple and easy for your accountant?

- Yeah. Yeah. Absolutely. So, offset accounts are a hundred percent still a thing.

- Yep.

- They do only come as a part of package timelines. So what I mean by that is you're generally paying an annual fee to the bank

- Yep

- To access extra things such as offset accounts. Used to be a big thing about credit cards, all that sort of stuff to try and get those, those better deals so to speak but no one really uses the credit cards much anymore. So, exactly. So they're still definitely a thing. I think, where we see them use, you know, what we've been speaking about lately in terms of investors is that really ensuring you've got everything neat and tidy

- Yes.

- In terms of if you've got multiple investments. so potentially having an offset account for each property

- For each property So your rental income flows into there the expenses for that property alone flow out I mean, just make everything clean and tidy. And the important thing to notice is that whatever balance is sitting in that offset account, is offsetting the interest chargeable on your mortgage

- Yes.

- For that property. And not that everyone's, you know, trying to save interest necessarily on your investment for tax reasons, but it still makes sense.

- Definitely. I always talk to investors and when we're first signing up new managements and getting prepared for new properties is having that kind of a safety net of funds. So whether it's your first mortgage repayment in the account. So, we know that when we were leasing a property, that first month of income isn't always our first month of income. So you've always got your letting fees to come out. You've got any accounts to be paid whether it's like things like smoke alarms or services to the property that need to be there for the tenant and to meet your legislation. And then depending on when the property was leased in the month too depends how much income is gonna be there. So I say have that safety net of that first mortgage repayment in the account and then let everything flow back into there. Any excess funds obviously minimize this interest payable. And then if you've got any outgoings that you pay yourself whether it's things like insurance premiums and things like that, always take it back out of that one account. So really it tax time, it's quite easy for your accountant. Everything's there in ins and outs in that one account. And it makes preparing for end of financial year and your tax so much easier.

- And I think it gives you some comfort too to understand what each properties, what it needs.

- Yeah.

- Per month.

- And look, sometimes there's a top-up that you need to put in each week and you're just popping it back into that account, ready for that loan to come out some weeks. There's some months there's four weeks in a month some weeks there's five. So like you just depending, like you'll never have a true flow of rental income for the exact same amount each month. And I think that's really hard for owners to like calculate how am I gonna get this month? Well, kinda depends on how many weeks in the month. Was there any other outgoing? so having this safety net and this access offset account to put everything in, is just keeping the flow,

- Yeah.

- And making it much easier. So you're only just checking that one account every month to ensure there's funds there.

- Absolutely. It makes so much sense in setting it up correctly at the start.

- Yes.

- You're just gonna make life easier for yourself moving forward.

- That's right. So I'm Casey Haley director here at "Century 21." If you have any questions, Nick's always happy to help. If you need help with refinancing, are you looking to purchase the second investment property? Reach out to Nick. He's our guy in mortgage broking can hands down say that. Look Nick's done a couple of mortgages for me now. And the service that they provide as a company, is second to none. Thanks. Bye.