I have read the thread on offset account but still remain confused. In the beginning of the year I refinanced my PPOR mortgage from Bank A to Bank B. This released some equity from the house and I have 2 loan accounts established. Loan Account 1 (240K) was P&I with 2 offset accounts Account 1 and Account 2. Account 1 (20K) is where I deposit my wage and use for paying bills, shopping etc. From Account 2 (220K) the only debit is an auto debit to a credit card with 0% balance transfer offer which I got. I have paid some interest on Loan 1 this year. I have recently changed this to IO (effective from December) as I have achieved account 1 + account 2 balance > Loan Account 1 remaining balance. Loan Account 2 (150K) was set up as IO with a corresponding offset account Account 3 with 150k balance. I haven't paid any interest on this. I am now looking to buy an IP. If I withdraw money from Account 3 to pay for deposit, LMI, stamp duty, legal fees etc. will the interest charged on account 3 be tax deductible. Complicating the thing is all loans, account and the PPOR title is jointly owned with my wife. Due to some unfortunate health issues she is unlikely to work any time soon in future and I am in the second highest tax bracket. What is the most tax effective way for me to buy the IP. I am thinking of buying the IP in only my name on title.