Borrowing for investment; holding against PPoR

Hello

I've read this forum for ages and have learnt a lot. Thank you!

I have a PPoR and an IP. I owe money against both.

A while ago, I withdrew equity from the IP and kept it in a ringfenced offset account against that loan, drawing down the funds to meet costs (repairs etc, not loan repayments) associated with the IP and occasionally to buy shares. That met the "funds borrowed for investment" test, and have been claiming tax against interest on that ring fenced loan (interest on loan amount less funds in offset).

For ring fenced money, borrowed strictly for investment, from a tax perspective:
1. can you claim interest on the money from the point you borrow it?
2. or only from the time you spend it on investment?

Scenario 2 is what I'm doing atm - by keeping the funds in an offset against the IP loan, the interest is only becoming a deductible expense at the point I spend the money on the IP.

I'm doing a bit of refinancing, and now wonder if Scenario 1 is actually the case, could I hold that cash in a ring fenced offset account against my PPoR, reducing interest owed on the PPoR loans, and still claim through tax the interest on the full amount of money I borrowed for investment purposes?

Seeking general, non specific advice only - happy to look at any tips or ATO docs/decisions that may guide - I just haven't been able to identify them.

TIA

 

If you've structured the loan properly, you wouldn't have paid any interest, so the question becomes irrelevant.

If you have paid interest, then the question is what was the money for the loan used for? This will determine the deductibility if that interest.

 

Not sure where the question is. Sounds like a loan blended issue and have no idea what ringfencing is. If any funds were used for shares the interest is not a property deduction despite it being the loan security