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No worries. I am wondering if a sticky thread on general deductibility of interest should be placed under the Tax threads. Then issues like capitalising, offsets, etc. could be sub-threads since they are such diverse aspects. But then again, sticky threads get very long & people cannot...

If you want to deduct loan interest, the funds must be used for an income purpose. Borrow $400k, use $400k for an IP then fully interest deductible. Stick $50k savings in an offset means interest on the $350k balance is deductible. Rip your $50k out of the offset for a holiday and all...

Ummmmm ..... Borrow $450k and immediately stick $50k in an offset account for an extended period of time indicates the *PURPOSE* was not to acquire the PPOR. Therefore, when it converts to an IP only $400k is an investment loan when you drag that $50k out of the offset for your new PPOR...