Heaney Business Group

Offset vs Redraw – What’s the difference and why does it matter?

If you’ve got a rental property loan… this is one of the biggest traps we see clients fall into.

And yep — it can quietly cost you thousands.

🏦 OFFSET ACCOUNT = SMART & FLEXIBLE

Your money sits in a separate account linked to your loan.
• Reduces the interest you’re charged
• Doesn’t change the actual loan
• Take money in and out whenever you like
• ✅ Interest stays fully tax deductible

This is what we like to see.

🔁 REDRAW = WHERE THINGS GET MESSY

Extra repayments go into the loan, not beside it.

When you redraw that money…
you are borrowing again

And this is where people get caught.

🚨THE TAX TRAP (THIS IS THE BIG ONE)

If you:
• Pay extra into your investment loan
• Then redraw it
• And use it for anything personal (car, holiday, renos…)

That portion of your loan is now NOT tax deductible

💡 WHY?

Because the ATO doesn’t care what the loan was originally for…

It cares what the money is used for when you take it out

⚠️ RESULT = MIXED LOAN

Part investment ❌
Part personal ❌

Which means:
• More admin
• Messy records
• Lost deductions

📌 HBG TIP

If it’s an investment loan and you want flexibility:

👉 Offset account = yes
👉 Redraw = be very careful

We see this issue all the time…

If you’re not sure what your loan looks like feel free to contact us.