Does property have to be secured against investment loan

Hi, we’ve just bought another investment property and am abit confused re financing. We have had an investment loan (approved at $600K which we can redraw from as required) sitting there from years ago which we want to use for this purchase. Our conveyancer has advised that in order to negative gear, the bank needs to have the new property as security. Can someone please advise whether this is correct as initially when we set up our loans we set them up like this as we knew we wanted to buy another property but we weren’t sure when. The amount borrowed in this investment loan will cover the purchase price of $420K.

 

Sounds like your conveyancer is giving illegal tax advice which is incorrect. Security is not relevant for deductibility of interest, but you do need to borrow to buy the property for the loan to be deductible.
Negative gearing is also the wrong phrase - this is when the costs exceed the income

 

Taxation on a loan is based in the usage. If the loan is used for investment purposes then it's tax deductible.

Your solicitor should just focus on the legal side of things.

 

Solicitors can give tax advice, but conveyancers can't and neither can brokers!

 

There's the issue right there, ask them what qualifications they have that allows them to give tax advice?