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ARTICLE · 03 JUNE 2012

Investors: Beware 'mortgage management' plans

Moore Australia
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Split loan arrangements (or mortgage management plans) have attracted the attention of the Tax Office with TD 2012/1.

AustraliaFinance and Banking
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Investors contemplating an arrangement which is being marketed as a 'mortgage management' plan should be wary. Under this scheme, split loan arrangements – that is, the combination of an investment loan, a home loan and a credit facility – are being promoted as providing tax-effective financing and therefore have attracted the attention of the Tax Office.

The schemes generally involve a person taking out one loan for their 'principal place of residence' (the family home) and an additional loan for an investment property. The investor then establishes a line of credit facility. The Tax Office says taxpayers often partake in split loan arrangements to pay off their home mortgage sooner.

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