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Is redraw tax deductible

Discussion in 'Accounting & Tax' started by Syd Investor, 21st Jul, 2016.

  1. Syd Investor

    Syd Investor Member

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    Morning All,

    Lets say I owe $200K on my PPOR and I have $200K in savings. If I use the savings to pay the PPOR to zero and then use the $200K redraw for investment purposes will the interest on this become tax deductible? The other alternative is to pay the PPOR to zero and open a new separate loan split for $200K which can then be used for investment purposes.

    Appreciate your advice on this.

    Thanks
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    It is the purpose of theloan which determines tax deductibility.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  4. Coota9

    Coota9 Well-Known Member Premium Member

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    I have a 200K separate loan which is 100% purely for investment purposes-deposits,stamp duty,rates,repairs etc which I redraw from when required to pay for property investments expenses only.
    No personal funds go through this account at all
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The issue in the redraw is more one of refinance. You use it - Then repay it. If you redraw on the account for multiple properties its blended and the % split can get complex. Keep it simple and no issues
     
  6. Coota9

    Coota9 Well-Known Member Premium Member

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    Agreed if I had my time again I would do multiple splits to have 1 loan for each property purchase and buffer for costs.

    Can I use say my tax refund to pay down some of this balance than re draw and use for property costs within this account?
     
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    IDK. Depends.