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Your accountant is wrong on that one. Why not just pay the $50k back into the loan and cop a early mayment fee on this portion. You have a mixed loan in that it was used for 2 purposes, but there is an ATO ruling which allows a mixed loan to be separated into portions on a reasonable basis...

My view is that the connection between borrowing and investing is lost if the money goes into a savings account. But it seems the ATO accept that the borrowed funds can be still traced - according to one private ruling, which canot be relied upon, but could be used as a guide.

Yes, I don't see how the original loan could relate to the purchase of shares unless the sale of the property resulted in the loan being paid down and then redrawn for the share purchase.

Once put into a savings account they are no longer borrowings and interest no longer deductible. Asset sold so income no longer deductible as well. It is just cash.

Its up to your when you pay the loan off, but shouldn't claim the interest after the income stops.

Nope and nope. Not commerical to borrow at 5% to invest at 3%.

Interest can't be deductible if the purpose of the borrowings is gone.