Have you used your investment loan redraw for personal spending?
Protect the asset and your financial position.
Best for: Owners who have redrawn on an investment loan
When you redraw from an investment loan, you are borrowing money again — and the tax treatment of the interest follows what that redrawn money is used for, not what the loan is called.
An offset account is different. Money sitting in a genuine offset account is generally your own cash, not a new borrowing, so withdrawing it doesn't change the loan itself.
Why this matters
If redrawn funds from an investment loan are used for personal spending, the interest on that portion of the loan may no longer be deductible, and the loan becomes a mixed-purpose loan. Untangling that apportionment retrospectively can be difficult, and it compounds with every repayment. The use of the funds decides the treatment — not the loan's label.
What to check
- Whether you have ever redrawn from this investment loan, and what each redraw was used for
- Whether any redraws were used for personal spending (holidays, cars, living costs)
- Whether your surplus cash sits in a genuine offset account rather than being paid into the loan and redrawn
- Any period where the property was your main residence and the loan purpose may have changed
- Whether your accountant has ever flagged apportionment issues on this loan
Who can help
Accountant
A review of the loan's history and whether its purpose has stayed purely investment-related.
TAKE ACTION · DOCUMENT REQUEST
15 minutes to gather statements, then one email
Copy request
Copy this request and send it to your accountant.
WHAT YOU'LL NEED
- Loan statements showing redraw transactions
- Rough notes on what each redraw was used for
USE AI TO HELP
Use AI to organise your redraw history so your accountant can review it quickly — AI must not determine the tax treatment.
Best prompt for this issue
Help me organise my investment loan transaction history for my accountant. Using the redraw transactions I list, group them by what the money was used for, flag any that look like personal use, and prepare a concise summary and question list for my accountant. Do not attempt to determine the tax treatment yourself.
Quick modes
WHAT TO PROVIDE
- loan statements showing redraws
- rough notes on what each redraw was used for
- whether you have an offset account
ASK AI TO GIVE YOU
- a short summary of the situation
- the main issue
- missing information
- risks to investigate
- questions to ask
- the next three actions
Privacy: do not paste passwords, tax file numbers, bank account details or other sensitive personal information into an AI tool. If a document contains personal details it doesn't need, redact them before uploading.
What happens next
If mixing has occurred, your accountant can advise on apportionment and what can be done going forward — ideally before it compounds further. If you're regularly parking surplus cash against the loan, ask whether an offset account would protect you from this issue in future.
Important considerations
- Redraw and offset are not the same thing: redraws are new borrowings; offset withdrawals are generally your own cash.
- This is one of the more technical areas of property tax — if there's any doubt, get it reviewed properly rather than assuming it's fine.
- This is general information, not personal tax advice. Your accountant determines the actual treatment.
THE HOLD QUESTION
If the ATO looked at what each redraw was spent on, would the answer be comfortable?
NOT SURE WHAT TO ASK AI?
Ask a Better Property Question
Most people don't need more AI — they need to ask AI better questions. Type your question (or skip it) and copy a prompt that makes any AI tool ask you the right things first.
I am trying to understand this property issue. Before answering, identify any important information that is missing. Ask me only the questions that materially affect the answer. Once I respond, explain the issue in plain English, separate facts from assumptions, identify the main risks and give me the next three actions. Flag anything that should be confirmed with a qualified professional.
Privacy: do not paste passwords, tax file numbers, bank account details or other sensitive personal information into an AI tool. If a document contains personal details it doesn't need, redact them before uploading. This is a way to prepare — not financial, tax or legal advice.
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