What is your wife's income? You could explore selling the house to her (should be CGT and stamp duty free) - then the rental income received would be at the lower tax bracket (assuming she earns less than you).
I think the redraw idea you have raises the same issue- what are you going to use...
trust your accountant dude - he knows what he is talking about. You can only claim the interest on the $150k owing. You get one shot at getting the loan structure right and you have already rolled the dice on that property.
jrc raised some good ideas to think about.
