Question on Tax deductability of IP Loan

Discussion in 'Accounting & Tax' started by new_investor, 14th Oct, 2016.

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  1. new_investor

    new_investor Member

    3rd Sep, 2016
    Hi all,
    I have just refinanced my home loan based on Terry's ideal loan structure tips as per below:
    Total approved amount - $388K
    Offset Account - $180k
    Loan 1(PPOR) - $240K
    Loan 2 (for investment purposes) - $140k (388-240)

    The problem I have found with this is that I'm still looking for an IP and the $140k loan 2 is already drawn out and added to the offset account i.e. as of now I'd be paying interest on this loan even though I'm not using the money for investment purposes.

    Based on my discussion with the bank, there are 2 options:
    1. Open another offset account and link it to Loan 2 and when i find an IP , pay directly from offset account.
    2. Pay $140k from offset account into loan 2 to bring to $0 and redraw when I need to pay a deposit. problem with this is that I can only redraw max upto $30k.

    Could someone please advice on which option I should take from tax point of view?
    thanks in advance