Refinance split loan

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

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  1. Paddi

    Paddi Member

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    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 Plus Member

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    Refinancing doesn't change deductibility of interest - generally
     
  3. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Yup should be a piece of cake - it's the original purpose that's the key.
     
  4. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    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 Plus Member

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    It's the use rather than purpose
     
  6. Hamish Blair

    Hamish Blair Well-Known Member

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    Would it be sensible / wise to ensure the refinancing is also split to demonstrate ongoing traceability?
     
  7. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Yes 100%.
     
  8. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Yes :)
     
  9. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    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.