Redraw for PI

[HH2007]

All, anyone can help?

I have 2 split loans to finance PPOR. The first loan has plenty extra repayment so that the monthly interest is closed to zero, but it still has over $150 thousand redraw facility. If I redraw the first loan and use the fund for down payment to buy an investment property, is the interest expense in this loan tax deductible? Arguably, the purpose of the first loan will change from consumption to investment. I have no intention to redraw the first loan for consumption in the future, so that the first loan will be isolated.

Thanks

HH

 

[Peter_Tersteeg]

You should confirm this with your accountant, but generally speaking, if the purpose of the borrowing is for investment purposes, the interest on those borrowings is tax deductable.

As you're redrawing the funds to purchase an investment property, that interest should be tax deductable.