[LucyofOzMember@lucyofozJoin Date: 2007Post Count: 3]

May 2, 2007 - 1:04 am

Thanks Elka, much appreciated. 

I was initially hoping to buy a new PPoR perhaps 6-12 months after moving interstate but if I rent out my current place then thats unlikely to happen in which case I won't have any needs for the funds any time soon. 

So might I be better off putting most of my funds back on the mortgage & refinance it to reflect the lower loan amount so my monthly payments will at least be lower & more closely matched to the rent I'll be expecting? (ie, my current monthly payments are still based on the size of the loan i first took out (80%) where as I've since been able to pay off an additional 15% in extra payments)

Does that make sense maybe? 

[LucyofOzMember@lucyofozJoin Date: 2007Post Count: 3]

May 1, 2007 - 6:08 am

Thanks for the replies so far – much appreciated!

Terryw wrote:

I am not an accoutant, but think you are correct on the 6 year rule. Once your property is rented out, or even while you are trying to rent it, I think all expenses should be deductible.

Great!  Good to know TerryW.
 

elkam wrote:

Or if you had just put these extra payments into an 100% offset account linked to your mortgage you would have had the same effect (i.e paid less interest) and still not had this problem when you moved the funds out of the offset account so as to be able to claim the interest on the full mortgage. I love offset accounts.

In hindsight Elka, I really wish I did look into getting an offset  account  when I got my mortgage – at the time I thought I was best sticking with something vanilla & easy to understand.

elkam wrote:

BTW Unless you have a fixed interest loan taken out when the rates were very low, I can't think of an account that will pay you a better interest rate than that you are paying on your mortgage. Add to that the fact that you will pay tax on the interest earned ( in this new account ) without getting a tax deduction for the extra interest you pay on the mortgage while you are trying to sell the house, this seems like a not so good idea, unless I am much mistaken. 

You are of course absolutely right – I'm very much thinking this was a 'Doh!' moment of mine!

Mortgage Hunter wrote:

If your redrawn money has been invested then it should all be tax deductible.

Just ensure than none was used for private expenses – just investment usage.

I didn't realise that  Simon – I'm just planning on leaving the funds in the ING account until I'm ready to buy a new PPoR (by which time I would have sold the current PPoR).  So would that maybe count as being for 'investment usage'?  I'm assuming not & that it has to be something where theres potential for capital gain/loss.

One more question:  What if I just reversed the redraw & put the same amount of funds back on my mortgage again?  Does that mean it could then be all tax deductible?

Thanks again!