is refinance tax deductible?

Discussion in 'Loans & Mortgage Brokers' started by New Town, 15th Jan, 2017.

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  1. New Town

    New Town Well-Known Member

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    Hi all

    My PPR loan is set up as purely a line of credt that I'm using as deposits for IPs. The rate is a bit high so if at some stage I refinance the whole loan out of the LOC to another lender will it still be deductible?

    Thank you
     
    New Town, 15th Jan, 2017
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Refinancing doesn't change deductibility of interest. See my tax tip 22.
     
    Terry_w, 15th Jan, 2017
    #2
  3. Corey Batt

    Corey Batt Well-Known Member

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    Won't cause you any issues.

    The purpose of the new loan would be to pay out the existing investment loan, so the investment purpose still remains. Refinancing of investment debt happens all the time.
     
    Corey Batt, 15th Jan, 2017
    #3
  4. Redom

    Redom Mortgage Broker Business Plus Member

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    If its a simple $ for $ refinance, than it will have no impact at all (as per Terry & Corey's posts above).

    If there is an equity increase and your seeking additional funds, whether that portion remains deductible or not depends on what you do with the funds (investment or personal purpose). If there is a change in purpose, best to split out the extra funds into a separate loan account/split, to apportion and keep track of use.
     
    Redom, 15th Jan, 2017
    #4
  5. Ross Forrester

    Ross Forrester Well-Known Member

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    If you pay a loan application fee the cost will be amortised over 5 years or the life of the loan - whichever is less.

    If the loan is for an investment related purpose the cost of refinancing will be tax deductible.
     
    Ross Forrester, 15th Jan, 2017
    #5
  6. New Town

    New Town Well-Known Member

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    OK gents, that's for replies!

    Cheers
     
    New Town, 15th Jan, 2017
    #6