You don’t give enough details to make an assessment, but

1. Paying down a loan will result in tax complications if you need to use this money back later.

2. Ideally borrow to buy income producing investments and keep your cash for personal expenses.

3. What did you do with the extra money borrowed? There could be complications resulting from this.

Get valuation at date of moving out and this will be the cost base – roughly speaking.

Also have the option for keeping it CGT free for up to 6 years s118-145 ITAA 97

Do you own your parent's property?

If you have paid off your PPOR then why not consider a trust structure?

Rickduff wrote:
Hello everyone. 

I have a question about how to increase your borrowing capacity? 
I currently have a PPOR with my partner that we paid $295,000 for in September 2012 which is in both of our names. 
I am saving a cash deposit for an investment property which I hope to get mid to end of 2014. 
My income is $90,000 PA and my…[Read more]

Get person A to ask person B to hold property for person C!

I agree – trusts don't help you borrow more!

This is a legal question. There are a couple of ways to do this, but far reaching consequences.

First off – Why do you want to do this?

You might want to consider going for as high an LVR as possible and then parking the cash of the SMSF in a 100% offset account attached to the loan. This will save the SMSF interest and keep the funds available. With SMSFs once you pay a loan down you cannot reborrow it.

Yes it may be possible – but do you have the cash to build?

Josh/Joah

You might want to consider a unit trust or a company, depending on the circumstances – or maybe own names.
Whichever way you should have some written agreement – shareholders agreement, unit holders agreement or just a joint purchasers agreement. This should cover as many what ifs as you can think of – what if he wants out and you…[Read more]

How do you know you have considered 'all the risks'?

What about
death
incapacity
divorce
insolvency
efftects on future borrowings
guaranteeing loans
director duties under the corporations act and common law
etc

Best to seek legal advice – from a lawyer – as there are many issues related to this.

Then talk to a broker about the lending issues – the effect on borrowing capacity etc.

try MIchael at http://www.houseofwealth.com.au

This bit made me smile.

bort wrote:
so does that mean i can originally claim residence and put power on for only one month before renting it out for six years without losing any CG when it comes time of sale?

No.

Don't forget you must establish it as your main residence first for this to work (s118-145 ITAA97). Merely putting power on may not be enough.

Bruce from Brisy wrote:
Hi Greg would you be able to comment on my last post please…..
So in summary if I have it correct – if I take out a CALL Option on a Qld domestic dwelling for say 12 months with 2 x 6 month extensions written into option – and on sell CALL option to an ultimate buyer or nominee – I only pay the CALL option fee…[Read more]

try http://www.houseofwealth.com.au

Yes, you would need to convey the title to one name.
Costs
– tax advice
– legal advice
– conveyancing
– loan discharge
– new loan
– new LMI possibly
– CGT possibly
– stamp duty