Tricky sell/buy debt structure problem

I have an unencumbered IP I want to sell, and purchase another same-value IP.

It is financed approx 50/50 by two loans (secured by other property). I would like to repay the loans (to $1) then redraw them to finance the new IP. A couple of problems with one of those loans:

1. It is fixed rate, and the fixed rate is very low (1.97%), as it was originally OO then re-drawn to investment. So it would be a real shame to mess this up.
2. Part of this loan financed this IP, another part of this loan financed another IP.

What would be really good is if you could somehow take the proceeds of this sale and move them directly into the next purchase, and just say basically you swapped the asset out (remember they are unencumbered) and so the debt all just stays untouched. Everything that was financing the old IP is now financing the new IP.

 

If you sell a property and don't repay the loan but use the money from the sale to purchase another property, my view is that the interest will not be deductible.

If you sell a property but don't pay out the loan that was used to acquire it then since there is no income associated with that loan you could no longer claim the interest.
See
Tax Tip 71: Deduction of interest after assets sold

Have a look at my tips on Loan Recycling.

Loan Tip: What is Loan Recycling? Loan Tip: What is Loan Recycling?

Tax tip 342: Tax Issues with Loan Recycling Tax tip 342: Tax Issues with Loan Recycling

 

You should ensure the fixed rate break occurs prior to the repayment otherwise the break fee will be a CGT cost, not a deductible cost.
You cant "swap" a loan. You have borrowed funds for a specific purpose and must resettle the loan for a new loan to be deductible. The break fee is unavoidable