Is redraw tax deductible

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

 

It is the purpose of theloan which determines tax deductibility.

 

See Tax Tip 6: Using Redraw to invest

 

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

 

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

 

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?

 

IDK. Depends.

 

I have never done a redraw, but why will you end up paying interest on a redraw ?
Do you mean the extra interest you will be paying because of the original loan amount increasing (due to the money being pulled out in redraw) ?

 

redraw means you are borrowing money so interest accures

 

It is best to contact your lender before doing this. If you have a $200,000 loan and pay $200,000 into the loan, some lenders will close the loan automatically.