So normally a home loan entails purchase price i.e. $300,000 plus say $10,000 stamp duty. Therefore total interest on a 310,000 loan i would count as fully deductible (if rented out). If a buyer is subsequently refunded stamp duty as part of the FHOG , has anyone had a decisive knowledge as to whether this is treated as a seperate refund outside of your loan - in other words interest on the 310,000 will still be treated as fully deductible as the original loan was for both stamp duty and purchase price? The refund of stamp duty is therefore treated as a seperate transaction and payment by an organisation back to you, and doesn't in any way affect your interest deductibility? Thoughts? I have the cheque for the refund and am planning to auto-deposit it straight into my offset account. THe only way to avoid (if indeed i have the wrong idea from the above) interest complications if the refund voids the original intentions of the loan and therefore the interest deductibility, would be to have the cheque refund from OSR deposited straight into the mortgage account? If it went into the offset it would become a mixed purpose funds/slush would it not? Thoughts and advice would be appreciated as I am sure this is common?