For The Property Investor – In Advance Of Your Interest I
Lets deal with the second first. Very simply, this means that you pay 12 months interest on your loan in advance. Thus, towards the end of the year, for example, before June 30, 2008, you pay 12 months interest in advance, you take June 30, 2009. So you have pre-paid years, interest and can now claim a deduction for the current year. Thus, in July, investors who are eligible to do so can get back some of that interest in the form of a tax deduction.
You can not do that with a loan you have, when the loan is negotiated or concluded you should ask your broker for a loan interest in advance.
Interest in advance is even ready to “fixed rate, the interest that people in the home loan except that you pay interest in advance.
Some lenders also offer interest on the advance options such as annual, biannual, quarterly and monthly – and thus the distribution of payments over time.