From: Geoff Donges
G'day all,
After a recent thread in regard to LOC's & interest/tax, I was wondering if someone could tell me exactly how this goes. (I'm a bit thick ))
Some time ago I posted a question asking if I could claim the interest on a redraw from my PPOR loan for the deposit & costs of my 1st IP. The loan was down to less than $50 owing & the answer was yes.
I purchased that 1st IP in December. A bit later, with a small amount of extra cash that was to be used at a later date to pay for carpeting PPOR, I put it down on the IP loan. At 5.95% I was thinking that was pretty good.
I've been thinking about this & surely I can't have it both ways. If I redraw that money from the IP loan what are the tax implications? I.E:
I can REDRAW from PPOR loan for IP deposit & costs, which would make the interest tax deductible.
If I REDRAW from my IP loan for something personal, even though I'd put in that extra money ??????
Without thinking about it, I would normally have just put in extra amounts into IP loan every now & then, redrawing when needed, like a bank account. The interest would be more after the redraw but no more than if I had not put in the extra money. I would simply have just claimed all the interest on the IP loan as tax deductible.
I'm now thinking this could get me into trouble if/when audited if I did that.
If that is correct then I'll have to forget that extra money & make no redraws on the IP loan so I don't complicate the tax issue. Yes / No ?
Any opinions are most welcome. Thanks.
G'day all,
After a recent thread in regard to LOC's & interest/tax, I was wondering if someone could tell me exactly how this goes. (I'm a bit thick ))
Some time ago I posted a question asking if I could claim the interest on a redraw from my PPOR loan for the deposit & costs of my 1st IP. The loan was down to less than $50 owing & the answer was yes.
I purchased that 1st IP in December. A bit later, with a small amount of extra cash that was to be used at a later date to pay for carpeting PPOR, I put it down on the IP loan. At 5.95% I was thinking that was pretty good.
I've been thinking about this & surely I can't have it both ways. If I redraw that money from the IP loan what are the tax implications? I.E:
I can REDRAW from PPOR loan for IP deposit & costs, which would make the interest tax deductible.
If I REDRAW from my IP loan for something personal, even though I'd put in that extra money ??????
Without thinking about it, I would normally have just put in extra amounts into IP loan every now & then, redrawing when needed, like a bank account. The interest would be more after the redraw but no more than if I had not put in the extra money. I would simply have just claimed all the interest on the IP loan as tax deductible.
I'm now thinking this could get me into trouble if/when audited if I did that.
If that is correct then I'll have to forget that extra money & make no redraws on the IP loan so I don't complicate the tax issue. Yes / No ?
Any opinions are most welcome. Thanks.
Last edited by a moderator: