Tax Question regarding Investment Home Loan

Hi there,
I'm just wondering if someone can give me some general advice.

I am currently living in my own home, which was originally purchased as an investment property.
I don't owe anything on the house, but I still have the loan account with about $360 000 available redraw.

I would like to buy another house (to live in) and have my current house as a rental again.
Am I able to redraw the $360 000 to put towards the purchase price of the new house and be able to claim the interest on this 360K on my tax return ?

You need to confirm with your accountant, but in my opinion the answer is no.

To test the tax deductibility, it all comes down to what the borrowed funds will be used for, and it is irrelevant where the source of the funds come from. Is it being used for personal or investment purposes is the question that needs to be answered?

In your case, you want to use the borrowed funds for the purchase of a house for you to live in which is personal purposes, therefore non-deductible debt. If on the other hand the funds were being used for the purchase of an investment property, then it would be different and you would be able to claim.

Cheers,

Tom

Thanks Tom,
I suspected that this was the case and I will double check with my accountant when I complete my tax return.