Changing Purpose of Line of Credit/Using LOC for IP.

Hi all,

I recently signed a contract for my first investment property and have an interesting question to do with using existing lines of credit to assist with the 20% required.

I had two separate lines of credit set up using existing equity in my PPOR about 12 months ago:

1. 120k with which to invest in the market, which was lent entirely to my discretionary FT (separate tax issue obviously, but well worth it considering quite significant gains to distribute to lower income fiance)
2. 40k with which to purchase a vehicle and assist with moving costs during a relocation to WA.

To prepare for the impending purchase, I have sold market investments totaling about 40k in the trust (initially funded by the Investment LOC) to repay the LOC, and separately paid off the “personal” LOC in entirety.

So I have available for 20%: 50k in the investment LOC, 40k in the originally “personal” LOC and 15k in the bank.

I have made the following assumptions, however have time to restructure if absolutely necessary which is why I am posting this.

1. Given the investment LOC has always been used for deductible purposes, this would continue to be so, however I must keep tight records of this.
2. Transfer the 15k from the bank account into the investment LOC allowing that amount to also be deductible.
3. Initially the personal LOC was drawn down for non deductible purposes, however as I have paid it off in total, (the balance owing is 0), if i were to completely redraw it for deductible purposes i could begin to claim the interest incurred.

I understand this is a bit messy, but its what I have to work with. I have had a bit of a change of long term strategy and this is how the dust has settled!

Ideally I would for the entire deposit to be deductible. (Duh)

Thanks,

Quattro