Hi, I have a mortgage on my PPOR. Separately, I have a sum of cash which I would like to invest in shares. Do I need to split my loan or can I just use the cash to pay down the mortgage & then immediately draw it out to buy the shares? Is splitting my loan required for the purpose of deducting the interest from the cash drawn out, or has it been recommended by my accountant to make their job easier?
Best to ask a tax agent/financial advisor or ask ATO's technical assistance
ATO has a ruling TR 2000/2
Do I need to split my loan
can I just use the cash to pay down the mortgage & then immediately draw it out to buy the shares?
has it been recommended by my accountant to make their job easier?
General information
The deductibility of a loan is connected to the purpose of the loan, regardless of what is used as the security. A redraw is considered a new loan. There are other rules such as for 'splitting' a loan, repayments, mixed purpose loans, apportioning and so on. Would be best you ask your accountant to explain to you.
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