Quote:
Originally Posted by lorrimer
Michael,
If you are going to capitalise your interest on the margin loan, then your cash flow would actually increase by 47300 as you are not actually paying that money out, but still getting a lovely tax deduction
Only your LVR is suffering as a consequence
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Quite right!  Lazy again...
To be honest, LOE is not part of my strategy. I just plugged my numbers in the spreadsheet to see what it looked like. I haven't tweaked the spreadsheet to allow for capitalising of interest costs, so it assumes they're all paid for in the year they're incurred. No biggie. I looked at this more from an "investigation" perspective than an "implementation" one. Just doing it out of idle interest. My actual retirement plan spreadsheet is a lot more robust and is based on spending net passive income and using no LOE. I do however draw the growth in value on my properties out and margin it at 50% into managed funds annually, thereby maintaining my property LVR at 80%. But that's a whole other discussion and not one for this LOE thread.
Cheers,
Michael.
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Goal: Financial independence by 2015
Plan: Focussing on Resi property development in the short term to build in equity and improve cash flow.
Status: Development site procured and DA approval achieved. Intend to commence construction mid-2009.
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