Split loans and tax

[Blueberry]

We have just split our home loan into
1. Main loan p&i
2. Deposit for investment property IO

So it has just been split and the IO portion is sitting at -$x

We will be putting the deposit down hopefully within a week.

So do I
A. Put some money from our redraw on main p&i part into the IO portion. Making it $0 until it is ready to come out
B. Leave it as is and just make sure I don't claim interest charged on the investment part of loan for the next week off our tax? (then pay for deposit out of our redraw)

Thanks

 

[Peter_Tersteeg]

I'm confused. Where's the redraw actually sitting? I don't understand why you're proposing to take money out of the P&I portion for investment purposes (which would not be a good thing).

My thoughts would be that the investment split has been set up to have lots of cash in the redraw for investment purposes, which is where you'd take the IP deposit from.

As an example:

Your PPOR is worth $500k. You have a loan of $400k with $150k in redraw (owing $250k) and you want to restructure for investment purposes.

The resulting split would end up with:
1. PPOR loan with limit of $250k (what previously you owed) with no redraw available.
2. Second loan account of up to $150k limit, $150k in redraw and thus $0 owing. You can access that $150k in the redraw facility for deposits.

 

[Terry_w]

We have just split our home loan into
1. Main loan p&i
2. Deposit for investment property IO

So it has just been split and the IO portion is sitting at -$x

We will be putting the deposit down hopefully within a week.

So do I
A. Put some money from our redraw on main p&i part into the IO portion. Making it $0 until it is ready to come out
B. Leave it as is and just make sure I don't claim interest charged on the investment part of loan for the next week off our tax? (then pay for deposit out of our redraw)

Thanks

SOunds dangerous. Get proper advice

 

[AXXO]

I would claim the interest on the deposit loan if the property is intended to be rented out as an IP. If the contract was accepted before the split it would clearly show the intention of the loan and property use and it's all used for paying the deposit.