All Topics / Help Needed! / REDRAW from Investment unit loan

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  • Profile photo of PLANTPLANT
    Member
    @plant
    Join Date: 2008
    Post Count: 3
    April 12, 2009 - 12:47 am

    Hi all,

    Have an investment loan and claim negative gearing currently.
    Can I deposit $30,000 now and then redraw $30,000 for my home improvements(not investment) in 3months without any tax concerns?
    Are there any restrictions or issues I need to be aware of?
    Investment Rocket Repay loan.

    Rgards

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    April 12, 2009 - 1:49 am

    Better of set up a separate 100% offset account to be on the safe side.

    Richard Taylor | Australia's leading private lender

    Profile photo of elkamelkam
    Member
    @elkam
    Join Date: 2006
    Post Count: 722
    April 13, 2009 - 1:24 am

    Hello Plant

    I believe that if you deposit the $30K into your investment loan and then redraw it for personal use ( own home improvements) you will lose the ability to deduct the interest on that $30K on your tax. Not a good idea.

    An offset account is the answer, as has already been suggested, but if your loan does not support this facility then you have to work out whether it's really worth changing to save interest for only 3 months.

    Best check with your accountant.

    Cheers
    Elka 

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