Hi PLC,  

Thanks, yes this is what I have been hearing also.. 

So if I refinanced and took say $100K from Loan 1 (IP1) and used that as the deposit for Loan 2 (IP2) then any deductions for that $100K must be come from IP2.   Therefore the net result for IP1 is the same.. no benefit.  Its still just as geared (negatively or positively) as it was before it was refinanced.

Is there a way I can move IP1 back into the red again after it has become positively geared?  I've heard the only real way is for renovations that are deemed critical for tenant occupancy, or if I sell it and essentially start again, this time being far more aware of the benefits of using an offset account.  Lesson learnt:  Never pay down a loan, and always use an offset account.  Even for your PPOR, as some day your PPOR might become an investment property and youll wish you hadnt paid it off…

Seems like a lot of hoops to jump through for something which should be ok'd by the ATO by now…  after all, the process is possible, its just not easy.

Is that right?