Cash-out refinance

If I do a cash-out refinance on one of my IPs is there any point in temporarily putting the money in my PPOR's offset account until I'm ready to put the money towards a new IP?

Or is that considered to be changing the purpose of the IP loan so its interest is no longer tax deductable? In which case I'm better off leaving the money in one of my IPs offset accounts.

 

Tax wise creates a mess and no more interest would be deductible

 

IP rates will be higher than PPOR rates so no net benefit plus its can cause contamination issues if mixed with non deductible debt.

Best to leave it in a linked offset or possibly as redraw.

 

Avoid like the plague - this highlights the importance of getting the right structure and advice from day 1 to avoid long term mistakes.

Funds should be stored against the loan account that you borrowed it from until used.

 

Why would you want to do this?
Borrowing at a higher rate to offset a lower rate?

Or are you thinking there may be a tax benefit because your making the investment loan fully drawn. If so I would reccommend reading all of Terry's tips.

 

Perhaps the equity release loan doesn't have an offset/somewhere to park funds (rare, but not available on all products).

As others have said, best to avoid moving funds between different purposes.

If there's no offset or place to put inv equity release funds, leave equity pull funds inside the loan account (redraw facility required) and draw out when your ready to buy the IP.