Using LOC to pay down Margin Loan

Any pitfalls to be wary of, other than the fact that I wouldn't be able to capitalise the interest as I currently am with the margin loan?
Would the interest on the LOC still be tax deductible?
It would certainly make sense from an interest rate point of view!
Thanks

 

I posed this question and another to my accountant. I was confortable with both before, even more so after. Here are the questions and responses:

4. I have been redrawing from bank loans to pay margin loans (to prevent margin calls) and am treating such as a type of refinance. That is, moving in bits the loan from the margin lender to bank loan. Any problems? Also, for one margin lender I have been redrawing from bank loans and putting in a cash account with the margin lender to prevent calls for as long as it is required. Again and problems here with claiming the bank loan interest?



I don’t see any problems with this.



5. Next year I will be in the position (as are many others) where I will have sold funds but the proceeds will not clear the original loan. In general I know the remaining loan may no longer have deductible interest, but I have read that where a loan funds many investments it can effectively be treated as a rolling overdraft and so remaining a valid expense. Can you advise further on this?



This is fine. You are still entitled to claim a deduction for the interest since the expense originally arose from an income producing activity.