locodave Posted February 12, 2014 Share Posted February 12, 2014 Hi, My parents are selling their house which they have lived in for over 20 years. They are planning on going seperate ways. My question is with the money they get from the sale, im planning on keeping it for them in my bank account where i have a home loan to offset the interest until they are ready to purchase again. Are there any fees or taxes that i have to pay if i was to dump for example $500,000 in my account? Thanks. Link to comment Share on other sites More sharing options...
The Incredible Hull Posted February 13, 2014 Share Posted February 13, 2014 I've transferred similar amounts to and from my family and there were no charges. Having said that, it was the same bank and we also had a good business relationship between the bank, so it could be a case by case basis, but I really don't see why there is any charge. Link to comment Share on other sites More sharing options...
locodave Posted February 13, 2014 Author Share Posted February 13, 2014 Thanks mate Link to comment Share on other sites More sharing options...
benm Posted February 13, 2014 Share Posted February 13, 2014 You just pay tax on the interest you earn from it. But just be careful if you put it into a savings account, some have a max limit, e.g. 500k, if you exceed that you won't earn any interest. Link to comment Share on other sites More sharing options...
Geoff Posted February 13, 2014 Share Posted February 13, 2014 (edited) You just pay tax on the interest you earn from it. But just be careful if you put it into a savings account, some have a max limit, e.g. 500k, if you exceed that you won't earn any interest. Agree. Visit your bank a talk to one of their advisors , they will virtually trip over them selves to get you to deposit the money into a an account. Most banks have a variety of options , it's a matter of picking one that off sets your loan account but also pays interest. Having said that , I think you will find the bank will deposit the money against you loan account which will reduce your monthly interest charge considerably. However , confirm that you can withdraw all or part of the money sometime in the future & that it is not locked away for ever. Also , unless you have a firm period avoid term deposits. If you need to withdraw the money prior to the end of the term the interest rate can drop from the agreed % to a much lesser amount. Geoff Edited February 13, 2014 by Geoff Link to comment Share on other sites More sharing options...
The Incredible Hull Posted February 14, 2014 Share Posted February 14, 2014 (edited) To be more specific on what Geoff has already mentioned above, dump all the money into an "offset account" as you can withdraw from it anytime you wish. And you then contact your bank manager\or speak to the bank, and they will recalculate your repayments (the amount they automatically deduct). From there you can tell them to either deduct more or less etc. Generally you would tell them to deduct the minimum (interest only), and if you want to put more, then can you manually do this online. Edited February 14, 2014 by The Incredible Hull Link to comment Share on other sites More sharing options...
Geoff Posted February 14, 2014 Share Posted February 14, 2014 An additional point. The interest charges will drop signifitly so , as you will most only have the money for a short period maintain your current payments or more if possible. This will reduce your principle at quite a rapid rate so when the money is withdrawn your principal will be a lot less than if the $500k had not been deposited. Geoff Link to comment Share on other sites More sharing options...
rockfisherman Posted February 14, 2014 Share Posted February 14, 2014 Your interest charges will drop by about $2000 a month. Harry If it's to good to be true, it usually is... Link to comment Share on other sites More sharing options...
The Incredible Hull Posted February 14, 2014 Share Posted February 14, 2014 Your interest charges will drop by about $2000 a month. Harry If it's to good to be true, it usually is... Thats highly dependant on how much he actually owes and how often he is making the repayments. I.e. if you repay per week, there will be a dramatic saving as opposed to paying per fortnight or month. Link to comment Share on other sites More sharing options...
rockfisherman Posted February 14, 2014 Share Posted February 14, 2014 If he owes $1,000,000 and he gets charged $4000 a month approx because it varies month to month depending on how many days there is in a month and how many repayments you get in, in a month, and you dump half a million in your offset account, your interest charges will drop by $2000 approx. Harry If it's to good to be true, it usually is... Link to comment Share on other sites More sharing options...
Testlab Posted February 14, 2014 Share Posted February 14, 2014 (edited) Beware the tax liability. You can't just enjoy the benefits of an extra $500K without there being tax implications. You have boosted your income by having the offset amount there to play with. You need to not only talk to a bank but also to an accountant who can assist with a tax smart way to do this. Many accountants aren't that smart when it comes to planning but great at reconciling your liabilities later so choose wisely. Do this before the $500K hits your account. Edited February 14, 2014 by Testlab Link to comment Share on other sites More sharing options...
The Incredible Hull Posted February 14, 2014 Share Posted February 14, 2014 If he owes $1,000,000 and he gets charged $4000 a month approx because it varies month to month depending on how many days there is in a month and how many repayments you get in, in a month, and you dump half a million in your offset account, your interest charges will drop by $2000 approx. Harry If it's to good to be true, it usually is... Yes thats obvious, but I wasn't referring to that. If you make repayments each week, as opposed to each month, you will shave off roughly 5 years from your loan. Link to comment Share on other sites More sharing options...
rockfisherman Posted February 14, 2014 Share Posted February 14, 2014 Yes thats obvious, but I wasn't referring to that. If you make repayments each week, as opposed to each month, you will shave off roughly 5 years from your loan. Yes it's true, if you make weekly repayments you will shorten the term of your loan. We were told if we made weekly repayments it would cut 3 years off our loan. So if you can do it, by all means do it. 3 years off a 30 year loan dosnt sound like much, but it's a lot of time and money. Harry If it's to good to be true, it usually is... Link to comment Share on other sites More sharing options...
The Incredible Hull Posted February 14, 2014 Share Posted February 14, 2014 Yep, I personally think its a lot of money. Say its saving you 50k for instance, thats 50k after you've paid all your bills, and tax... So its probably more like 100k+. Why can't we be more like other countries, Switzerland for example. Link to comment Share on other sites More sharing options...
locodave Posted February 24, 2014 Author Share Posted February 24, 2014 Wow dis t think this thread would have so many replies. Will go through this thoroughly. Link to comment Share on other sites More sharing options...
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