At the best you would only want to pay the interest on the LOC. Even better is talking to your accountant about not paying the interest at all and letting it capitalise – must be careful though.If you can do this you can pay off your PPOR faster (although the ATO doesn't see this as a legitimate reason to capitalise interest)

I think there must be 2 threads on this exact same topic – or deja vu??

If you sucked out equity for the next PPOR the interest wouldn't be deductible.You are better off moving the LOC to the new property, otherwise you will be worse off with tax as if you paid out the LOC then you would have less tax deductions and will end up with a larger loan on the new PPOR which won't be deductible.

Mike has covered it all.I can add that asset protection will be weakened by transferring an existing asset to a related trust. What are the long term goals? Can you do the project on your own or will you bring in partners?I think a discretionary trust will add the greatest flexibility. To make it easier to bring in others down the track maybe…[Read more]

Its a bit tricky, but it could be done. You would just be changing the security for the loan. Just make sure it is not paid out at any stage, or deductibility will be lost.

Gateway wrote:

Terryw wrote:
  From what I can see if we go this way she would have to set up a Pty Ltd Company/Unit Trust structure (to protect the assets) and a Discretionary Trust to Disribute the rents (with the possibility of there being another company so the rents would only be taxed at 30%).Is this what you are getting at?   If so, ho…[Read more]

Hi,I don't think you are doing it right and you shouldn't proceed until you do a lot more research. If you do it will be ok, but there are so many ways to enhance it to make it much better.eg if you buy a unit for $200k and have a $100k loan with the bank, you then later buy a PPOR. This would mean you are losing $7,000 in tax deductions per year.…[Read more]

Gateway wrote:

Terryw wrote:
Hi PaulYes, the properties would need to be transferred to the trustee of the trust. Stamp duty and CGT would be payable at market rates.If the trust needs to get a loan to buy the properties then the lenders will require personal guarantees from all trustees and/or directors of the trustee company (and maybe…[Read more]

I think it all comes down to return.With investment properties the idea is to leverage so parting with a small amount of money can lead to a very low return when things go well. Imagine if you buy a property that costs you $50 per week. Paying $50 into your home loan may save you 10 years off the loan and $200,000 interest. But $50 into a new…[Read more]

I think the answer is that it will depend on when you entered into the original contract to purchase the property not the date the new title came into existence.But there is also a possibility that CGT won't apply if you are developing. Then it would be just income tax.

Hi PaulYes, the properties would need to be transferred to the trustee of the trust. Stamp duty and CGT would be payable at market rates.If the trust needs to get a loan to buy the properties then the lenders will require personal guarantees from all trustees and/or directors of the trustee company (and maybe shareholders if these are different).…[Read more]

Also, if you are going to buy a new PPOR in the future then you will want to make sure you are able to free up as much cash as you can for that purchase. If you place all your cash into this one then you will be worse off with tax.A way around this, to a certain extent, is to borrow 105% for this one including costs. You could borrow 80% off the…[Read more]

What would happen if you enter into a relationship and then it ends with the other party claiming your mum's gift?Make sure it is properly documented as a loan.

Gateway wrote:
TerryWThanks for taking  the time to answer this post.  If it ok can I ask you a couple of questions about your suggested framework.1.  How will the discretionary trust minimise tax for my mother? I don't really understand this.2.  She will have to pay to tranfer the property, so best to do this before development sta…[Read more]

I agree, Just tell them.If they won't play ball then set up a LOC on the existing property with st George and then for the new house go to another bank and borrow 80%.

rich0082 wrote:
Thanks TerryW,Yes my husband and I are trying to resolve this as best as we can, and yes ownership is 50-50. There is a statement in the trust:Unit holders not liable to indemnify trustee:"No unit holder shall be under obligation to indemnify the Trustee or any creditor against any liability or obligation incurred by the Trustee…[Read more]

I started lending my own money many years ago and it is stressful and a pain in the butt when they don't want to pay you back. Payday loans would have a high risk of default I imagine.

In that case then you will have more leverage and a safer position. Its unfortunate that you didn't have a company as trustee as if you were to transfer your units to them and get out of the trust altogether you would have to change the trustee and change all the title deeds and reapply for loans etc.Have a read of the trust deed and see if there…[Read more]

What sort of trust is it?Who are the appointors if it is a discretionary trust?You could be in a very good or bad position as if you control the appointor you can control the trustee and therefore the properties. You could then take control and sell the lot and if a discretionary trust you could give yourself all the money (and so could she if she…[Read more]

8.5% pa capital gain for the next 20 years is extremely high!