Usage of funds 'debt recycled'

Hi all,

I've never debt recycled before, and want to ensure I'm on the right track here.

I'm planning on splitting my $950k PPOR loan into $750k and $200k this week. In 3 weeks I'll have enough in my offset and will pay down the full $200k in one go. (My understanding is it needs to be paid down in one go)

I'll then use that $200k for a combination of:
- Renovations of an IP owned in personal name (once renovated I'll sell the IP and use the funds to pay down more PPOR debt and debt recycle again)
- Loan to Trust #2 to purchase shares
- Loan to Trust #1 to purchase property

The $200k will be drawn down progressively over a period of time.

Given the above 3 uses are for investment purposes in different entities, I don't have any issues, right? My Accountant will just need to figure out what portion of the interest is claimed by each entity I'm guessing.

Thanks

 

It doesn't need to be paid down in one go, but might as well do it in one go.
You would have a mixed loan if you used the one split for 3 purposes, so would need to apportion.

You would also need to enter into a written loan agreement with the trustee to be able to claim the interest

 

Thanks Terry

 

What will the accountant need to know and charge to determine each purpose and the % ?

Its tax advice and legal advice. Neither can advise without the other.