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because to argue that you were just paying down the non deductible one would be seen as tax avoidance. at best you could hope to apportion it across the 2 amounts.

and herein lies the problem with LOE. the loans cannot be separated. any repayments need to be apportioned across the ded and nonded components - with interwst allocated to the current balance of each. if you never sell, you will need to keep these records forever. easier to never mix...