I obtained a LOC about 3 months ago for Investment purposes. I used $3,000 of it for investment, then had to dip in and use funds as personal. I'm not going to bother doing the calcs for tax, I'm just not going to claim any Interest as deductible. My question is, if I pay it back to a NIL balance now, so on July 1 it is $0.00 with $0.00 charged for FY08/09 and then use it for investment, should it be OK to claim as 100% deductible? Cheers everyone
You may want to double check with your accountant - but as far as I'm concerned, paying the balance down to zero and then redrawing would effectively "reset" the purpose of the loan for tax purposes. Just perhaps check with your bank to see whether you can actually go to zero balance without them automatically closing the account (shouldn't be a problem with a LOC I'd think).
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