Loan Interest Deductibility

Just a question related to the deductibility of loan interest for an investment property. I currently have a refinance happening of my PPOR to release equity for another property. It seems that things have moved a little slow on this with my broker and there is a possibility that this refinance and equity release may not happen until after settlement date of the new IP. They've told me that if this happens, and I settle with cash in it's place, I can still tax deduct the interest on the equity, even though it was not technically the cash used for settlement. Is this correct? I'd always thought otherwise... Thanks in advance!

 

No. You cant refinance a loan when there was no loan to refinance.
The equity loan would be and remain 100% non-deductible. You cant lend to yourself. You cant refinance yourself as a consequence.

Delaying settlement so the loan is made on time would be one way to fix it.
Why is taking so long ?

Who is the "they" that gave you tax advice ?? Neither qualified, correct or insured. Sign of concern really.

 

Get an associate, like your mum, to lend you the cash to buy the property, and then refinance your Mum when the bank are sorted.

Get the docs prepared so the money trail is clear and above board. And get a sign off opinion from a tax professional that the tax effect will happen as intended with the docs as shown in advance.

 

Not another broker giving tax advice??? I will help you sue 'them' if need be.

 

Yeah, all as I thought, thanks guys.

I can delay settlement if need be but it shouldn't come to that, I've had signed paperwork for the refinance since before Xmas.

 

Can I do this if they've annoyed me a little??