Tax deductible transfer for settlement

Discussion in 'Accounting & Tax' started by Foobles, 15th May, 2022.

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  1. Foobles

    Foobles New Member

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    Hiya,

    I have set up a new loan and bank account for the purchase on an IP.

    At settlement I want to draw down an unused loan against my PPOR. If I transfer from the PPOR loan account to the IP bank account offset prior to settlement, can the interest on the PPOR loan be considered tax deductible?

    Thank you,
     
  2. Terry_w

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

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    Are you borrowing to produce income?
     
  3. Ross Forrester

    Ross Forrester Well-Known Member

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    If you can clearly trace the flow of funds to an ultimate income producing purpose you should be fine.

    Don’t pay cash from your main residence offset (non deductible) to buy an investment property and then borrow to top up your offset on the main residence. You have only dealt with a private mortgage in that instance and you will not enjoy a tax deduction.
     
  4. Foobles

    Foobles New Member

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    Thanks Terry & Ross. Yes this is borrowing to purchase an IP which will produce income. It's just that I want to move the borrowed funds to the IP bank account offset (which is at another bank) prior to settlement so at settlement the new loan and transferred borrowings can be drawn down to pay the vendor.
     
  5. Terry_w

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

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    Offsetting a different loan?