I am not sure, that is something that you should discuss with your accountant. There is a chance the ATO could look at it as some sort of scheme, so it may be wise.

re 1Say the rent was $20,000 pa. Expenses were $10,000 and depreciation $5,000Profit = income – expenses          = $20,000 – ($10,000 + 5,000)           = $5,000This would be the taxable income of the trust which could then be distributed.

Keeping in mind PBRs are only binding on the person who lodges the request look at this one. Look at the ATOs reasoning and you will get a good idea how it works:PBR 83291http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/83291.htm

Hi GOM1. Depreciation and other costs come off the income of the trust. So it won't actually reduce the interest, but reduce the profit.2. yes, if there is a profit this will be distributed in accordance with the deed. Usually there are a wide class of beneficiaries and the distribution can be made at the trustee's discretion.There are also some…[Read more]

Hi SpiroCompared to other countries (and to the old days here) I think Australia loans are very innovative. 100% offset accounts, LOCs, LOC + capitalising interest, 30 year terms, etcRememebr the old days, back to Jan Somers books even not that far back, there was only PI loans and maybe IO loans if you were lucky – and that was it.

Hi BankerI didn't think there were many lenders these days that allowed income guarantees from parents who are not on title.

or just get the parents to onlend the 20% to you.

Guarantors don't have any effect on you claiming anything. So you should be able to claim the interest on the whole loan amount (if the property is rented out).You parents will be givening an equity guarantee, so you will still have to demonstrate to the bank that you can service the whole amount to be borrowed. They will also have to put up their…[Read more]

yes its legal.Legal implications would include to make sure the trustee is acting in the best interests of the trust. You could do this by making sure everything was done properly at commercial rates etc.Tax implciations would include taking into account any losses would be trapped in the trust. If there are losses then you may need to consider a…[Read more]

You could transfer the existing property to a trust, but there would be stamp duty payable on the full value. There are also issues with asset protection. Transferring into a trust will reduce asset protection. Unit trusts also lack asset protection.Then there are tax issues. If your property is negative cashflow, losses are trapped in the trust…[Read more]

Thanks Mr. Its best to know the correct answer, even though it hurts.Doesn't seen fair though!

Trustees are assessed at the top rate on undistributed income, i beleive. If might be better to distribute it to a company which then lends it back to the trust.

yes, avoid cross coll

This is like asking Is Mcdonalds the way to go for a healthy meal?

LOCs generally have a slightly higher interest rate, so I would only use these for accessing equity. No point in using a LOC for the new purchase (the 80%) – just get a IO loan. A LOC would be ok, but only if you did not use it to put money in and out, just to pay the minimum in interest each month.

going from memory, board is just reimbursements for expenses such as food, water, electricty etc.

Ring the ATO again, twice more and you may get different answers. Also look at the PDF files at http://www.bantacs.com.au – i thnk htere is one called 'how not to be a property developer'

there is no gift tax in Australia and you can't be liable for the debts of others – generally. I Think your safe

I don't think that is correct, the cost base of the new land should be the value at the date of creation. Assuming you have a house on it now, it should  all be CGT exempt (as long as its your main residence etc).

Not if the 'boarders' were being charged more than the costs. There are some rulings etc on the ATO site about this. I have some references, but ain't home at the moment.