IP Loan revaluation for share purchase

Hello,

I'm seeking a revaluation of an investment property and would like to use the additional funds to purchase shares.

Current IP value: $600k, loan of $470k, $35k in offset.

If the bank were to revalue to $700k (2 similar properties in same complex sold for ~$730k), I would hope to increase the loan to $560k (keeping an LVR of 80%). Apart from my terrible maths, that should provide 90k for additional investment.

I would like to use that 90k to top up existing holdings in ETFs. First fundamental question - can this be done?

Is there a particular way I have to structure the loan, to ensure I can still claim a tax deduction on the interest payments for that 90k? Does the loan have to be split (if that is the correct term)?

Or, if I am diligent with my record keeping, is it sufficient to demonstrate direct withdrawals from the IP loan to the ETF purchases (e.g. transfer of exact dollar amounts to broking account)?

Thank you in advance for any insights you may have. I appreciate no specific financial advice will be given.

 

Best option would be to split the loan.

If you ever choose to move into the property, then the loan will become mixed purpose and you will lose your deductibility on the shares portion.

 

It can be done, as mentioned above, you definitely want to split. I was looking at something similar (still not decided which way to go yet) BUT you should be considering debt recycling if you have a PPOR with debt outstanding on it. Another thing to consider is are you going to freak out if it drops 20-30% (SANF - sleep at night factor) ...

 

Thank you both for your comments, much appreciated.

 

Not really necessary to split the loan if the ownership structure of the property and shares is the same as long as the shares pay dividends. But it wouldn't hurt to split.