use cash out to invest

Discussion in 'Accounting & Tax' started by NewSubaru, 1st Dec, 2020.

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  1. NewSubaru

    NewSubaru Member

    Joined:
    18th Aug, 2020
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    Location:
    Melbourne
    Hello all,

    I am refinancing my Investment Loan, current balance is $225k.
    new loan will be $250k on principal and interest (to satisfy cashback criteria), so i will end up with $25k cash out
    I want to use this $25k to invest in ETFs

    will this be the cleanest set up for tax purpose
    split loan 1 - $225k; interest component is deductible
    split loan 2 - $25k; interest component is deductible

    or since i will be using all $25k for ETF investing, can i avoid split and claim interest component on the whole $250k?

    many thanks...not so simple in my brain..
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    14th Jun, 2015
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    Location:
    Gold Coast (Australia Wide)
    Im not a tax guy

    For accounting purposes easier to keep separate

    As an aside, do you have any non deductible debt ?

    ta
    rolf
     
  3. Terry_w

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

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    Get some tax advice. Just because you can doesn't mean you should
     
  4. NewSubaru

    NewSubaru Member

    Joined:
    18th Aug, 2020
    Posts:
    21
    Location:
    Melbourne
    Thanks to both answers

    Yes have non deductible debt as well

    PPOR $657k split into $400k fixed and $257k variable
    Variable has offset linked to it, with a little bit of $$ in offset
    refinancing to diff lender, with same split structure, for better rate.
    no cashout required on this one as above the $250k treshold.

    and the $225k Investment as above.

    I am not "actively" want to do debt recycle, i just want to make the most efficient use of the $25k cashout