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John2468(Newbie)Newbie
10 Nov 2023

Hi, I have my main account and 3 investment properties all mortgaged with the same bank, I sold one investment property and put the excess money into one of the properties accounts which has a redraw facility, taking the amount owed to just $101, to save paying so much interest, all properties are principle and interest. The other property is already offset and covered by the money in my main account. My accountant said that if I now take that money back out of the redraw and put it into my main account, I can now never have the interest as a tax deduction for that property? Is that correct?

3,185 views
3 replies
3,185 views
3 replies

Most helpful response

Most helpful reply

DanielleATO(Community Support)Community Support
13 Nov 2023

Hi @John2468,


The redraw of the money does make it difficult. It depends on what you use the money for. If it's not for investment purposes, that would impact the ability to claim the interest as a deduction. You can only claim the interest on the loan that relates to the investment properties.


We have a similar post on re-draw from investment property loan you may find helpful.


All replies

Most helpful reply

DanielleATO(Community Support)Community Support
13 Nov 2023

Hi @John2468,


The redraw of the money does make it difficult. It depends on what you use the money for. If it's not for investment purposes, that would impact the ability to claim the interest as a deduction. You can only claim the interest on the loan that relates to the investment properties.


We have a similar post on re-draw from investment property loan you may find helpful.


John2468(Newbie)Newbie
13 Nov 2023

Thanks for the response, I do find the whole thing confusing, I thought that as my main bank account doesn't pay interest, then I should just put the money into another account (the investment property mortgage account) to save interest, and then later transfer it back in full when needed, but this seems to have ruined me for forever. So is there no way of putting the money back into the main account and claiming the interest again?

AriATO(Community Support)Community Support
13 Nov 2023

Hi @John2468


I get what you mean. Redraws are looked at as new borrowings. As @DanielleATO said, it depends what the redrawn amount is used for whether you can claim the interest. You may want to get financial advice to see what the best option will be for you.

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can I claim tax deductions on interest again if I pay back a redraw | ATO Community