using cash in PPOR loan for IP's

[farmilor]

Good Morning all

I've done a bit of a search on here for the answers I want, but can't find what it is that I need.

My situation is this:

PPOR:
value = $550K
loan total = $380K
cash sitting in loan account = $175K (in loan itself, not offset)
current loan principal = $205K

IP1:
value = $350K
loan = $236K

Now I realise that putting all that cash directly into the loan is not ideal, should have instead set-up an offset account (may not be too late to do this, will check with bank soon).

What I would like to do is use $100K of the cash in PPOR as deposits for IP's as well as drawing equity on IP1 to 80% (extra $44K), then move the remaining $75K from PPOR into offset.

What i would like to know from people in the know is how to structure this to make the interest paid on the $100K pulled from PPOR tax deductible?

Would this $100K and the $44K from IP be put together into a LOC to be used purely for investing purposes?

Any help would be greatly appreciated.

Cheers,

Richard

 

[jaycee]

so you'll be paying interest on $144k... that $144k is going to be used for income producing asset(s)....

No different than setting up a whole new IP loan for $144k

Yes, I believe it's tax deductible.

It's not the source of the money, but the purpose the money is used for which determined eligibility (my understanding). You are using akk the money for an IP

 

[Rolf Latham]

Hiya Richard

To simplify your life, ask your lender or broker to split the existing loan so that the 100 and the 44 have SEPARATE loans.

That way the accoutning will be MUCH easier and there wont be any questions as to deductability

ta
rolf

 

[Perp]

What Rolf said.

 

[farmilor]

Thanks for the replies

May just need to give Rolf a call and see if he can sort this our for me