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I hear what you're saying Colin..having said that though, what my accountant suggests is inline with the ATO in what Terry W also states in his post above "ATO has said that if the dominant purpose is to capitalise interest so you can pay down the PPOR debt faster then they can apply Part IVA to...

Our accountant suggests it is Okay that way. We are not doing it to debt recycle. Our predominant purpose to keep deductible debt & non-deductible debt separate. All rental income goes into the investment LOC's thus any monthly short fall that may occur capitalises secondary by default.

Yeah I have a few LOC's used for Investing & Personal uses only. All rents goes into them, with IP loan interest and expenses taken from them. Any shortfall between rents going in and expenses including IP loan interest get capitalised onto the LOC balance for the month. Depending upon...