Can i access extra money in IP loan?

[wally]

I have an IP, that every month or so i would deposit spare cash (from my salary) above the normal repayments.
Is there anyway i can access the extra money for personal use like a PPOR deposit? (Without selling the IP!)
The accountant says no, but this just doesnt sound fair!

I know now i should have been using an offset account instead, and havent made any extra payments in two years but there is an extra $100K in there from previous years.

 

[wally]

Is the best i can do is setup an offset account with the IP Loan, and put the extra
$100K in here, with the monthly repayments being deducted from this offset account.

This would eventually reduce the extra cash, while leaving me to use the rent minus expenses, to add to the PPOR loan repayments....but still keeping the IP interest fully tax deductible?

Does this make sense? or is there a better way?

 

[boomtown]

I have an IP, that every month or so i would deposit spare cash (from my salary) above the normal repayments.
Is there anyway i can access the extra money for personal use like a PPOR deposit? (Without selling the IP!)
The accountant says no, but this just doesnt sound fair!

I know now i should have been using an offset account instead, and havent made any extra payments in two years but there is an extra $100K in there from previous years.

You can do that - its your money - it just wont be tax deductible.

Your second post is a reference to debt recycling. People argue about whether or not its acceptable all the time. Go check out the tax forum further down the main page.

 

[stumunro]

i think your accountant should get his head checked.... why would u need to sell the IP to access the funds?

yep what you want to do is to try and get a SEPERATE redraw loan or LOC setup against the 100k in equity.

if the original IP loan was 300k for example you would be left with a

200k IP loan (deductible)

and

100k redraw/LOC loan (non-deductible, as you have used it for a PPOR)

if you can setup a seperate loan, it will be easier to seperate the non-deductible and deductible interest repayments, otherwise you will have to proportion it at the end of each year.

*please double check this info with A different accountant / finance specialist to the one you are using*

 

[wally]

Sorry, what i meant to say is, can i access the money for personal use but still legally claim the total interest as a deduction.
The original loan was purely to purchase the IP, which has always been negatively geared. From my salary, i added any left over each month into the IP loan.

Doesnt seem fair that i can't now access the money from salary, and still keep the total interest deductible.

I think i will just use it to invest in something else instead.

 

[stumunro]

you need to see it as that you paid back 100k of the deductible interest.

and now you are getting a new loan against the equity, and the purpose for this new loan is not investments.