how to pay 10% deposit - tax deductiblity

working out this scenario to understand how would one pay 10% deposit from equity release without affecting tax deductibility....Need to make sure drawn money doesn't get mixed with any other money (i.e.savings)

Laon A 20K (20K sitting in redraw) (No linked offset)
Laon B 30K (30K sitting in redraw) (No linked offset)
Both Loan A & B standard Investment IO loans....
40K (i.e. 10% deposit) required to be paid by EFT....

Options 1:

• Step1: Create brand new offsetA against LoanA on date1, redraw 20K and put in offsetA, perform the EFT transfer of 20K. Wait overnight and close the offsetA on date2.
• Step2: create brand new offsetB against LoanB on date2, redraw 20K and put in offsetB, perform the EFT transfer of 20K. Leave offsetB open with 10K. Use these 10K at settlement and close offsetB

Option 2

• OR prefer creating only one offsetC and draw both (20K & 30K) loans in that and pay 40K by EFT. use remaining 10K at settlement and close offsetB

Trying to understand is there any benefits of creating multiple offset account. Thoughts pls...

 

Deductibity will be determined by the purpose of the borrowings.

You are redrawing money, so this is a new loan. If it's for a holiday or ppor etc it will not be deductible (generally).

 

Thanks. yes the purpose of redrawn money is to pay 10% deposit on IP purchase. I am more trying to understand the journey of these money from loan redraw to agent's trust account...using multiple or separate offset to park money from above scenario...

 

Ask bank to draw a bank cheque. If not option b

 

Thanks Terry. Bank is being very unclear if they can do this or not....so I am looking at the offset option to be safe....wasn't sure if separate offsets are required or not....thanks