Left over funds from refinance

[maloriopolium]

Hi,

I was wondering what I should do with the left over funds from a refinance for an IP.

Eg:

I have $255 000 that I am refinancing from Bank A. To make sure that there is enough money to cover the refinance, Bank B allows $260 000.
On the day of settlement, the actual figure that is refinanced is $257 500.
I am told that the left over $2500 will go into my nominated transaction account.

Since it's an IP, should I be putting the $2500 back into the loan as redraw or can I simply keep it in my transaction account?

If I kept the $2500 in my transaction account, would all future interest on the refinanced loan still be 100% deductible?


Thanks.

 

[Paul@PFI]

If the left over funds aren't used for the acquisition the use of the funds will determine if the residual is deductible. Rather than taint it by using for something else I would recommend you use it to pay some IP expenses - That way its 100% deductible.

Otherwise, pay down the loan.