hi, I recently refinanced two properties, to 100% cash out ($2.6m) - $1.8m variable at 4.15% (PPOR) and 785k 4.32% (IP) (CBA) The funds cashed out are sitting in 8 offset accounts over 8 respective loans, ($2.6m in offset over loans of $2.6m) so currently I'm not paying any interest since effective loan balance is zero. There's no non-deductible debt to pay down, so the cash is there in offset for a "rainy day". (Better to get the cash now while the banks are still not questioning/turning a blind eye to "cashing out") If I take, for example, $500k of the offset funds and use that for tax deductible purposes, is the interest that the loan then accumulates still tax deductible, even though the $500k was removed from an offset account (rather than the actual loan account)? I asked the bank at time of settlement if they could leave the refinanced (surplus) funds in each of the respective loan accounts for redraw at a later date, but they said they could not, so my only option was to move it into the offset accounts. I asked if it were possible to manually move this offset money back into each respective loan account so each loan had a zero balance, but he said that may cause the loan accounts to automatically close down (which he thought he could not manually re-open & would require a further loan application!), rather than being available for redraw at a later stage for (in my case) tax deductible purposes.