In TaxTank, you can allocate loans to properties in two ways, depending on how you want to manage your equity tracking and ensure tax accuracy.
While loan allocation affects your equity and forecast views, interest deductions are still based on how the loan was used, even if the loan is secured against a different property. Proper loan account setup and linking are prerequisites for ensuring accurate loan allocation and equity tracking. Linking bank accounts to properties is a crucial step to ensure your reports, such as Total Loan Balance and equity tracking, are accurate. Assigning accounts to relevant properties streamlines TaxTank’s features like Borrowing Power and Cash Position.
Here’s how loan allocation works, and when each method applies: Before allocating a loan, ensure that bank accounts are linked properly to the respective properties. Properly linked accounts create an accurate foundation for Total Loan Balance calculations and provide a seamless experience with TaxTank features.
1. By Security (Property Secured Against the Loan)
Best for: Reflecting how your loans are structured with the bank.
Use this option when the loan is only used for the property it’s secured against. Ensure that the loan accounts are properly added and linked to the relevant property before making allocations.
Example: A loan is secured against Property A and the funds were used solely for Property A — allocate 100% of the loan to Property A.
2. By Usage (Apportioning for Tax and Equity Tracking)
Best for: When loan funds are used across multiple properties.
This method aligns with ATO guidelines for interest deductibility and gives a more accurate picture of equity and forecasting.
Example: A $600,000 loan secured against Property A is used to:
Refinance $200,000 of Property A
Purchase Property B for $400,000
In this case, allocate 33% of the loan to Property A and 67% to Property B based on actual usage.
How to allocate a Property Loan in TaxTank
Go to Bank Feeds.
Find the loan account and click the three dots on the account tile.
Select Allocate from the dropdown.
Choose the relevant property (or properties).
Enter the claim percentage for each property.
Click Save to apply the allocation.
This setup ensures your equity tracking is accurate, and your interest deductions are compliant with ATO requirements. Proper management of linked accounts also enhances features like Borrowing Power and Cash Position while ensuring the integrity of your financial records.
Allocating Offset Account Funds for Property Purchases
When contributing funds from an offset account toward a property purchase, proper categorisation is necessary to keep your financial records accurate. Ensure such transactions are allocated using the Loan Drawdown category in the app. This step helps in maintaining clear and accurate tracking of the funds used for acquiring the property. By following these guidelines, you can ensure that your financial records for investment properties in TaxTank remain accurate and well-organised, which is vital for effective property management and reporting. If you have personal loans such as car loans, they should be categorised separately to prevent impacting your tax summaries. Use a custom "Personal" category or select the prebuilt "Personal Income – Other" category in TaxTank to ensure accurate reporting.
