Tax Deductability of Interest

[sage26]

We have recently taken out another home loan which will initially be used to purchase a new PPOR.

We have a few investment properties and the bank is aware we want to add to the portfolio down the track. The bank advised us to set up the loan as an investment loan so once we pay off the loan (which will happen with a few months of settlement), we can draw down again to fund the next investment property. While that is all okay from a finance perspective, will it cause any problems in regards to tax deductibility of the interest?

 

[Peter_Tersteeg]

Your accountant would have the final word, being more understanding of your specific circumstances, but overall the advice you've received sounds correct.

Make sure you pay the loan off in full, and you pay it off directly into the loan account, not via an offset account.