Redraw from IP loan to pay IP bills - interest tax deductible?

[The Project Mgr]

G'day,

Is the following scenario legitimate in the eyes of the ATO:

I redraw from the IP loan to pay for the IP's council bill or any bills associated with any IP. ie, I am borrowing to pay for IP bills. Is the extra interest against the IP loan tax deductible?

Kind regards,
PM

 

[feihong]

Get a confirmation from an accountant, but I'm more than 90% sure that the answer is 'yes'

 

[julia]

Yes, as long as the dominant purpose is not a tax benefit, which it appears not to be. You are not required to use your other income to prop up the rental property. PBR 69725

 

[The Project Mgr]

Redraw from IP loan to pay IP bills - how?

Thanks Julie, that is great - my Commonwealth bank IP loan has a redraw facility, but I must redraw at least $500 at a time. Given that each bill is less than $500, is it possible to pay all the bills using a credit card (this credit card does NOT pay any personal bills), then at the end of each month, redraw to pay off the credit card.

Is the redraw still tax deductible?

Kind regards,
PM

 

[TheCamel]

nope, this last option isn't tax deductible.

 

[The Project Mgr]

What about redrawing from IP 1 loan to pay for IP 2, 3, 4's... loan interests ? Is the extra interest on IP 1 loan acrued a legitimate tax deduction?