Mortgage Offset Loan, IP, and Principal Residence

Hi
I have seen a previous post by "Palmtree" on this topic on 4/8/10 but my situation is slightly different.
I bought an IP in 2010 with a Mortgage Offset Loan of $592,000. We plan to move into it in 2013 but although a nice area, land is not very big and we are considering to live in this house for a short time only.
I am currently claiming the interest on the loan as it is a rental property and once I move in then I will stop claiming the interest as it will become my principal place of residence.
The question is say in 2016, I have $580,000 in my offset account so I am effectively paying interest on $12,000 (ie $592k-$580k). Can I then use that $580,000 to buy another property which then become my new principal place of residence at settlement. At this time I start renting out and claiming the interest on the full $592,000 loan (on the original IP) all over again?
Is this a legitimate process and legal?
Look forward to anyone's thoughts/knowledge on this.
Regards
Adrian

 

Yes, as long as the offset account is a true offset and not a redraw facility which is called 'offset'. This works as your money has not touched the loan account but remained separate.