Hi everyone, We are new migrants and bought our first house in Melbourne by cash one year ago. Now we are thinking to buy another bigger house (for owner occupied) and turn our first house to an investment property. Our first house is worth about $330K now and our budget for the second house is about $550K. We do not have the 20% deposit of the second house so we are thinking to refinance our first house. Our current plan: Loan 1 (80% of 330K - Interest Only with offset account) = $264K Loan 2 (80% of 550K - Interest Only with offset account) = $440K 20% deposit and stamp duty of the second house = $140K The $140K will come from loan 1 and we would like to put the remaining $124K from loan 1 into the offset account of loan 2. Are the interests of the $124K tax deductible? We have asked an accountant and a broker and got different answers. The account said no because we bought the first house by cash but the broker said they are tax deductible. Not sure if we should post this here or in the "Accounting and Tax" sub-forum. In addition, if you have a better plan, please let us know. Thanks for any help you can give.