An option is just an agreement which allows the option holder to purchase the property at some time in the future.A lease/option is just a term to describe a situation where a person has a lease with an option to buy as well. There are heaps of different ways in which these can be structured. I have seen some which are over 30 years with the…[Read more]

Sounds like you don't fully comprehend IO loans -thats ok it took me about 5 years to get my head around them.The first thing you need to understand is the tax savings. The fact that you are paying PI means that you are paying down the loan. This is generally good but on an investment loan it means your tax deductions are decreasing. This extra…[Read more]

One of the main ideas behind using IO loans is not poisoning your money by changing the tax deductibility of loans – but there are also many other benefits such as lower repayments which means you can afford more.Don't worry about making individual properties cashflow positive – worry about the overall situation. And using the offset account/IO…[Read more]

Sounds like your broker has cost you a fortune in extra tax. I would seek a new broker who knows what they are doing and try to fix it asap before you go any further.2 Properties under one loan is an absolute disaster – especially as one is an investment. Every repayment you make will be reducing your investment loan as well as your personal home…[Read more]

Kalkat wrote:
HiWe are new to investing and bought a property last year.  Can someone tell me about trusts and when you should set one up please?CheersKalkat

They can be set up at any time, but you really should do it before you purchase the property.If you want to transfer an existing property you own into a trust you will be up for: – stamp…[Read more]

Let me explain further about the use of an IO loan and putting money in an offset account.Firstly, if you have non deductible debt you would be better off paying this down first rather than paying extra into an investment loan or into an offset on an investment loan. This is because personal debt is non deductible. Every cent paid into an…[Read more]

Ben and Mina wrote:
i have a quick question regarding that sandra, does this mean i can set my ip mortgages to IO, and each week make a manual payment that will vary depending how much i want to throw at it and not be penalised, but if i choose not to dont have to? i assume avid investors prefer to do it this way or something similar?thank you…[Read more]

he said he was contracting. That would class as self employed, but he has to be careful about overcoming the PSI rules so should seek professional advice.

No, the whole amount will not be deductible. Deductibility will depend on what the borrowed funds are used for. Taking money from redraw is reborrowing – so the interest on this portion will only be deductible if used for investment/business purposes – you will be using it to purchase a new owner occupied property.

Talk to a tax advisor about setting up a proper business structure. As you are self employed there are opportunities for you to 'share' your income with your spouse and reduce your income tax straight away. You could also set up a discretionary trust to purchase houses (forget hybrids). You won't need to worry about losses if you can divert some…[Read more]

You are highly geared with little room to move.Have you considered moving out and renting? You will probably find something similar to what you are in now for much less per week than the loan. You will also be able to get tax savings by negative gearing your current home – and can do so without CGT implications for up to 6 years.

maybe he is 64 years old?

STUART WILSON wrote:
HELLO,I am 27 yrs old and starting to look at testing the waters of investing in property,My motivation is simply an interest in property and the possibility to enjoy a diciplined social life while funding a principle place of residence and have an investment property or 2.My position in a nutshell is that 5 years ago i…[Read more]

Well, since you are renting you don't need to worry about spoiling your CGT exempt status of the house. So you could have one room set aside for storage or office etc and may be able to claim a % of the rent/electricity/water etc. Maybe even toilet paper and, tea, coffee, milk and tim tams for 'clients'

Interest on money borrowed to 'invest' into a discretionary trust is not deductible as because the trust is discretionary so there would be no guarantee of a return. (compare this to a unit trust where there would be a fixed percentage).As Dan said you can either gift or loan and each has different consequences in terms of asset protection and…[Read more]

Yes, copyright is held by the photographer (unless they assign it )- whether there is a notice or not. They may not mind however so you can ask if you can use the photos.

Companies are governed by the Corporations Act. It is a long act and there are heaps of rules surrounding companies so it is a big responsibility in being a director and running a company – even if you are the only share holders. The company is a separate legal entity and you must keep its assets separate and shouldn't use them as if they are your…[Read more]

From a tax POV I don't think there is any real need to keep these separate.

Sounds like the company would have paid tax on that money and it is retained earnings. It may be possible for the company to issue a dividend – but the problem is that the shares are probably not owned by a trust.The company probably can't get the money into a trust easily. The company could possibly donate it to the trust – but then you may have…[Read more]

Don't forget you may be able to claim part of the rent of the new house too.