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refinance cash being mixed up

Discussion in 'Property Finance' started by HomeMinister, 29th Feb, 2016.

  1. HomeMinister

    HomeMinister Well-Known Member

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    Hi

    could you suggest me: i have refinanced my IP1 loan with same bank and took 20k cash extra into my personal account (not offset). now this account also receives my salary and i pay down bills and living costs thru this account. the cash out money is still in my account and is mixed with salary and expenses. If i buy a new IP 2 with this mixed money can i legally deduct my full IP 1 loan amount from which i cashed out money.? please suggest!
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    No you cannot. None of the interest would be deductible.

    You also have a mixed loan if that $20k was not a new split.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    I think i have written a tax tip on how to fix this.
     
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Domnjan V Ato in this instance

    ta
    rolf
     
  5. HomeMinister

    HomeMinister Well-Known Member

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    none of the interest is deductible? do you mean whole loan amount or cashout 20k?

    i thought if you borrow to invest it is deductible?
     
  6. thatbum

    thatbum Well-Known Member

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    Yeah but you didn't borrow to invest - you borrowed to put money into your personal account. Unfortunate situation.
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    This is it in a nutshell
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The interst on most of the loan would probably be deductible. You would have to work out what % the $20k is on the total loan amount and not claim this.

    If you want to fix it you would need to split the loan into the 2 portions pay off the $20k and the reborrow it.
     
  9. Blacky

    Blacky Well-Known Member

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    If you still have $20k in your account, repay the loan in full. Any interst paid to date is not deductable.

    Then re-draw the the $20k and have it deposited directly into the REA trust account.

    EDIT - I just realised that the $20k wasnt split originally. Its not as easy as I firsth thought.

    Blacky
     
  10. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yeah dont pay the $20k back into the loan as it will reduce both portions. Need to split it first.