[skippy455Member@skippy455Join Date: 2009Post Count: 3]

February 24, 2009 - 8:34 am

Thanks for the clarification Richard.

Although I assumed Dan was referring to the redraw portion of the loan only. I suppose if I'd known 6 years ago that the property was going to become an IP, I would not have been paying any of the capital off, and may not have put in as large a deposit, but you live and learn right?

I will still redraw on the IP loan anyway, as it still makes sense for my particular circumstances, and will probably use the money sometime in the future for an investment (still too scared to purchase shares though!), and then I’ll be able to claim the redraw portion of interest at that time as well.Thanks again.Billy.

[skippy455Member@skippy455Join Date: 2009Post Count: 3]

February 23, 2009 - 8:56 am

Thanks Dan and Richard for your comments.
'The test for deductibility of interest is, 'What were the funds used for?' So, in your situation, the interest would not automatically be deductible, just because the security is an IP'

That pretty much clarifies it for me.

Cheers,

Billy. 

[skippy455Member@skippy455Join Date: 2009Post Count: 3]

February 23, 2009 - 5:29 am

Hi There, I’m new as well!Can anyone comment on a similar question to the above, however, my situation is, having recently (in the last six weeks) converted my primary residence (of 6 years) to an investment property, can I increase the loan on the now investment property, but only up to the amount the property was originally purchased for, ie only effectively ‘dipping into’ the deposit amount of the original loan, not into any capital gains amount, and still claim the interest on the increased amount as a deduction? My feeling is the ATO would look at the loan at the time the primary residence became an IP, but hope not. Is there a there a time in which you can do this, or is it from day 1 of the property becoming an IP.Thanks in advance.Billy.