Refinance split loan

Discussion in 'Accounting & Tax' started by Paddi, 10th Mar, 2020.

Join Australia's most dynamic and respected property investment community
  1. Paddi

    Paddi Member

    Joined:
    17th Feb, 2019
    Posts:
    14
    Location:
    Adelaide
    I have a split loan against my ppor. Portion A has been used to purchase dividend shares so interest is deductible. Portion B is ppor, so non deductible. What happens when I refinance to another bank? If I keep both portions with the new lender, would portion A still be deductible? Or is it considered to be paid off and re-borrow?
     
  2. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    Refinancing doesn't change deductibility of interest - generally
     
  3. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    Yup should be a piece of cake - it's the original purpose that's the key.
     
  4. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    A deductible loan that is refinanced for no more and not less should retain deductibility. You will need to demonstrate the continuity of course so make sure you retain statements since after refinance the old loan account may not be available and then you cant prove how the borrowed funds were used.
     
  5. Terry_w

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

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    It's the use rather than purpose
     
  6. Hamish Blair

    Hamish Blair Well-Known Member

    Joined:
    29th Sep, 2015
    Posts:
    489
    Location:
    Melbourne
    Would it be sensible / wise to ensure the refinancing is also split to demonstrate ongoing traceability?
     
  7. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    Yes 100%.
     
  8. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    Yes :)
     
  9. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    23,319
    Location:
    Sydney
    It would be wise to ensure the old loan/s are both split exactly as they are now. If any new funds are to be borrowed this should create a third split if it is for a new purpose.