Moving money (redraw?) from one loan to another?

Discussion in 'Accounting & Tax' started by wylie, 17th May, 2020.

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  1. wylie

    wylie Moderator Staff Member

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    I have several loans that I am ahead in the repayments, to the tune of about $90k.

    I'd done this to ensure we have no problems meeting payments through the build, but now I'm considering paying our next progress payment by redrawing on these loans, but I'd prefer not to make seven individual part payments which is messy for the builder.

    I'd prefer to transfer (technically I guess it is a redraw) the prepaid funds from six loans into the seventh loan, and then make one payment to the builder.

    I have a spreadsheet for each loan to allow me to recall what any redraw was used for, so I'd have good records, and it would show redraw funds going from six loans into the seventh loan, with a lump sum coming from that loan for the progress payment.

    Would that mess up the deductibility of any of the loans?
     
  2. Terry_w

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

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    using redraw is borrowing money
    redrawing from one loan into another is a refinance and doesn't change the deductibility.
    But it can result in mixed loans - which could be unmixed later and may not matter too much if the use is for the one entity and all investment.
     
  3. wylie

    wylie Moderator Staff Member

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    Thanks Terry. And you've hit the nail on the head about the mixed loans.

    They were paid right down, and redrawn for the sole purpose of our townhouse build.

    I'd prefer not to have seven loans, but we can't change it now.

    Appreciate the response. :)
     
    Terry_w likes this.