Thanks Terry,

I have received some advise that if we were remove all deposits and withdrawals from this home loan and leave as just the interest only payments and deductions that we will be back on track for 2011-2012 tax return.

I have also been told that there is alot of work for my new accountant to do, to work out the interest that can be claimed as a deduction but it is possible.
On this advise and speaking with a few other finance, solictor and accountants. We have decided to move to another accountancy firm. Don't know how much we will save for the previous 6 months though as we now have to pay 2 accountancy firms bills

Thanks for the reply Darren.

Some additional information that I should have noted is that we have a second rental property which is also managed by the same property manager. At the end of everymonth the income after expenses she has paid is also put into this account. I then each month pay from that loan the interest only as well as transfer the payment to the other account for the second rental property. Any moneies that are left over are used to pay electricity, gas, rates x 2, water x 2, telephone etc etc.

We are currently getting the house valued (last value was at $600k) to see if we can get a better interest rate.
If we are able to refinace for the same amount and have it drawn up as tennants in common ( as a don't work, 5 kids) would we be able to claim it 2011-2012  just in my hubbys tax return.

I will also organise another account where the income and bill payments can be used and then just transfer the repayments each month. so the rental property accounts will only show the interest only payments.
Does this sound right??