Retirement Planning & Experiences

[Happy Dude]

The whole re-borrowing against the main residence is most likely non-deductible for tax purposes because once the original loan is paid off, it’s hard to argue it’s done for anything but private purposes

It's called debt recycling I think. I'm not convinced it is as simple as splitting a main residence mortgage for investment purposes (beefed up with equity). There's heaps of spruiking on social media about how easy it is.

edit: I see @33kft has also mentioned debt recycling.

 

[MonteCristo]

We debt recycled our PPoR home loan (in our case, when we fully offset the loan, and was no longer charged interest - in order to purchase some shares). Word at the time was if you can demonstrate that you paid off the initial loan, you can convert that line of credit into an investment loan.

Obviously, previous establishment costs can't be deducted. But ongoing costs of the loan (annual fee, interest) can be claimed as an investment expense. And obviously only at a proportional basis (eg: can only claim ... 50% of the annual fee if you start the investment loan period from 1 January... Only 40% of the interest if 40% of the outstanding loan was for investment purposes, etc).

Not financial advice! This was from an accountant some 5 years ago.