Redraw on investment loan

I hope some can clarify this scenario.

The investment loan is started with 500k and an additional payment of $100k is made after 12 months. After 3 months, $30k is redrawn for personal use.

Will the interest be payable on $430k starting from the date when $30k was redrawn?

 

You will have a mixed loan after the $30k is redraw and would need to apportion the interest. Only the interest on 400/430 could be claimed.

But interest will be incurred, generally, on the daily balance of the loan. so interest on 430k only from the date of the redraw - generally.

 

Terry has provided a clear reply. Its important you realise it is NOT the security used for the loan that determineds deductions. Its how the $$$ are used. As the $30K is private that portion of the interest is never deductible even if the security for the loan is a IP. There are loads of posts on PC about blended loans. And if you later deposit the $30K back it doesnt reduce the private part. Once blended the $30K deposit would propertionately reduce each part of the laon so what was say 30/430 or 6.976% non-deductible would remain so. Wise to split the loan into whatever is 6.976% + 93.024% of the loan balance at that time and THEN repay the smaller element only.

 

hi, i have a similar question

PPoR mortgage split into 3 tranches...remaining balance in one of the 'loan accounts' is $1, with redraw funds available.

Read in other posts, i should pay the loan account to $0 balance and then if I redraw say $100K to buy shares or other investment purposes, then the interest charged would be tax deductible??

Cheers

 

It might be. Depends on a few things. Get some tax advice

 

As a practical comment, if you pay the loan down to $0, many lenders will close the account automatically. You'll no longer have access to the loan to redraw anything.