I'm selling a unit. Most of the finance for this unit will be repayed to the lender at settlement, but I also funded the purchase with redraws from other LOC's. Problem is, those LOC are now fixed loans with interest paid in advance. I can not repay the borrowed amount to these loans at this time. This means that the interest allocation on those part of the fixed loans is no longer deductable. Ideally if these loans where not fixed, I would pay the funds into the loans and then re-draw for another investment. It's a bummer and not easily re-arranged. Problem is what do I do with the sale funds that should be used to pay down these loans? I would love to park in my PPOR loan, but could I still then re-draw for investment and claim the interest ? This makes sense if you "follow the money", but I want to ensure that loans for investment are not contaminated and keep their deductable status. Yes, I've made life difficult, but any suggestions ?