is this potential loan deductible?

hi all, i had a senior tax accountant suggest me this, but did some research, and cannot find information to back it up?

scenario; deposit and stamp duty was paid for via cash to acquire investment/income producing property.

The accountant has advised that now that I have sufficient equity, I can now go ahead and borrow funds to cover the deposit and stamp duty initially spent to acquire said property, and place these funds into my non-deductible debt.

Is this correct? LVR, cash flow is not a problem for me so getting a loan is fine. I just would like to get some thoughts please.

 

@Terry_w @Paul@PFI @MikeLivingTheDream

 

A simple no.

 

Tax Tip 5: Reimbursing yourself - Impossible Tax Tip 5: Reimbursing yourself - Impossible

 

Thank you Terry, excellent explanation.
I thought any tax deductibility on any money lent depends what is it used for (above mentioned non-deductable debt, so why would it be deductible?), so if for a deposit for another IP purchase (hence income producing asset, this would be ok)....

 

Yes use determines deductibility. The trouble is the expense has been paid for so it no longer exists, hence you couldn't borrow to pay it.

 

It might be too late for this but
Tax Tip 53: Paid Deposit with cash - how to fix big mistake before settlement Tax Tip 53: Paid Deposit with cash - how to fix big mistake before settlement

 

The accountant should retire due to old age and bad advice if that was what they told you. Its 100% wrong.

You cannot refinance something that was never borrowed. And since is was paid in cash it cant be a refinance or a new borrowing. You cant lend yourself money !! However you may be able to allocated a specific cost or two eg repairs so that new borrowed $$$ can be used. But take care its not a scheme - That can occur if you pay for loan repayments using borrowed $$$ without a sound reason.

Switching non-ded debt and deductible debt should always be undertaken with extreme care.

 

Yes.

 

Thank you @Terry_w and @Paul@PFI

I'm imagining that possibly in the accountant's clients position. Possibly the bank how many years ago increased existing owner occupied loan, thus this (plus a private ruling) was to fix the bank error... anyways I am speculating here, and I am glad I got this covered! Thanks again Gentlemen!