For borrowing to pay interest you would ideally get a LOC and just borrow every month and let it capitalise until you reach the limit or until you have paid off your home loan. – but you need expert advice about this.

CGT = Capital Gains TaxMaybe you could minimise this by selling one per tax year.Try to work out what it would cost you in interest if you got a loan to build the new home, and then work out the CGT – it may be cheaper to keep the properties and pay non-deductible interest on your home, live cheaply and repay the loan as quick as you can. Rents…[Read more]

If you are going to rent out a property with equity you should look at borrowing to pay the interest. Then divert all income and rents to paying down the new PPOR loan.

Is the 1.2 Million loan deductible? (eg you may have used it to buy the shares).If it isn't I would consider selling the shares and paying this down to $1. Then reborrowing it so that all the interest would be deductible if you used it to purchase investments.From there you can consider what sort of investment.As for strategy, I think you should…[Read more]

Repayments are not all expenses, only the interest portion is.What you need to do is add up all expenses and depreciation and then deduct this from the income. If it is a profit it is added to your other income and you pay more tax, if it is a loss (negative gearing) then you minus from other income and you will save tax.For scenario 2 you would…[Read more]

What is the LVR?if it is in a major city you might be able to get up to 70% LVR. Rates are 10%+

Pay down all non deductible debt as fast as possible (or better – keep the money in a 100% offset account attached to the PPOR loan). And borrow as much as you can for paying investment expenses.When the non-deductible loan is paid off then you have a choice of paying down existing investment loans or getting more investment properties – or may be…[Read more]

But you are only decreasing the investment loan by taking away cash which you could have used on your home loan. This means your overall loan size is the same, but you are decreasing your deductible portion. ie you are throwing money away by increasing your taxes.Doesn't make sense.

Do some sums. Work out all the CGTs and selling costs and try to calculate if it is worth it. 

The trouble with selling is that it will cost you about 5%, and you are just going to repurchase another so that will cost you about 5% again (stamp duty etc). All up around 10% will be lost. Also tax may be payable too, depending on your circumstances – if you are doing it as a business it would be, income tax too not CGT.

CorineDo the sums. If you put your cash in the offset you will save the same as the interest on the loan – about 6%, but since your deductions are less you will pay more tax. If you put the funds in a high interest bearing account you may get around 4%, but will have to pay tax on this.

Why on earth would you want to pay out an investment loan when you will have a non-deductible mortgage on your home?

Little chance to get a loan for a business without using property as security. It is too risky.

YoungInvestor wrote:
I'll have a snoop around… For a deduction of $120 p.a it may not be worth my time. (That comment will come back to haunt me, won't it…)

Think of the ROI $120 for a 50c investment (stamp) = 240%

Are you sure you can avoid GST? The land and house will be new.have a look at the PDF booklets at http://www.bantacs.com.au there is one called something like "how not to be a developer."

Why not increase it by buying another property – if you can find one that you think will perform. Otherwise it may be hard to build up a portfolio.

YoungInvestor wrote:
Terry, When you say that you can 'amend' a tax return for up to 4 years, would you put through the 'amendments' in the current year, or would you actually submit an old return again? For instance, I forgot to include a share information service that I pay about $10 per month for. I have had it since 2008, but didnt claim it…[Read more]

Yes, the can usually make extra repayments on the wrap loan or pay it out in full. WIth the LO they just will have to exercise their option – and this will depend on the wording of the agreement.

nOOb1990 wrote:
Hi Guys,I was just reading on a few courses and was wondering what the differences were between a Diploma of Financial Services (FP), Advanced Diploma of FS (FP) and a graduate diploma of financial services or what not?Also was wondering do you think employers would prefer a bachelor of business rather then a diploma, advanced…[Read more]

Costs of a property while rented out are deductible.