Hi LinarI think that living off equity was only a minor component of those 2 companies with the major aim being to buy as many properties as quick as possible and then to wait for the growth to kick in. There was another financial planner, Steve Navra, who was a big fan of LOE and he used to say you should only access up to 80% of the growth after…[Read more]

thats a good idea Holdandrefinance. Julia's website is http://www.bantacs.com.au and there are a lot of free articles on there with many concerning capitalising interest.

carlin wrote:
In answer to Terry – we would sell some properties to pay off the others so that we had unencumbered properties delivering rental income in our retirement. Once retired we won't be able to afford all the mortgages.We already have a super fund to put that money into, so why bother setting up a trust?Yes, the rules to super could…[Read more]

Ben Ellingsen wrote:

give90 wrote:
ben;why do you establish a new disc trust for each property?

Reason 1 – asset protection – if one trust is sued all assets owned by the trust are "up for grabs"Reason 2 – when applying for finance, you don't have to include details of all your other properties which makes things a whole heap easier – this is…[Read more]

duckster wrote:
The ATO can sometimes remove an allowable tax deduction and back date it if it rules it not to be allowable and sees it as a scheme to avoid tax. Meaning you could end up having to pay it back 5 years of deductions in 2014 when they change their mind and change the ruling. Ask your broker for their financial advice license number…[Read more]

WJ Hooker wrote:
My question is…. How can you claim the deductions on the LOC if it is not associated with the Investment?The IL is for the house, so how can the LOC you build up be put against the house???You can only claim the interest against the property that is getting rental.I cannot get a loan for $400,000 against a $350,000 rental…[Read more]

MareeDeductibility depends on the purpose the funds are used for. If you set up a LOC and use the funds to buy a new property to live in, then you can't claim the interest on this.

carlin wrote:
 Trusts have always confused me, even since I first enquired about them on this forum ages ago. Conflicting advice from forumites and accountants = our IPs to date (just 3) have been bought in single or joint names.One of the many things I don't get is – if you are a buy-and-hold investor who plans to sell some properties just…[Read more]

HiYou could possibly increase the loan to 90% LVR and maybe even 95%. If you refinance this will lead to break costs from your fixed loan, which could be hefty, but you would end up with a lower interest rate.For tax purposes the extra money borrowed will not be deductible if used for the new PPOR. You can only claim the interest on the original…[Read more]

Really, all you are trying to do is to fund the shortfall on an investment property and want to borrow to do this.Run it by your accountant.I ran something more aggressive past my friend who was high up in the ATO for many years. I asked him what he thought of paying all the rent into the offset account (not the LOC) and then borrowing from the…[Read more]

ibis69 wrote:
I am told that you can rent out your PPR and rent a property fro a similar purpose,The benefit you get back could be up to/more than about $26,000 ,I envisaged thsi to be the sort of deal where really both rents equal out and you end up basically with your normally home loan but with a bonus of Approx $26,000  extra tax at the end…[Read more]

I think some of the information on that site is rather dated now.

I just reread the original post – and it seems less aggressive than the Harts.In the Harts case it was a product marketed by a lender with the specific aim of increasing tax deductions. The Harts put all of their income and rental income into the home loan portion and let the whole interest on the LOC capitalise.Paul is using the rent to pay part…[Read more]

This looks very similar to being a scheme to increase tax deductions. Read the case of Hart v FCT (2004) and read it in full before you try this.Your broker shouldn't be providing tax or legal advice unless qualified so run it by your accountant or lawyer first. Capitalising interest is allowable as is borrowing to pay business expenses. There are…[Read more]

Thanks DanNow you have me thinking. I actually have a new trust which is accumulating income losses due to a house being built, so I am interested in the answer. Though I am still not convinced with your example as it concerns primary production loss which is treated differently.I will do some more research.Thanks

pissing off an agent?

Another mine is closing down in Tasmania -was announced on Thurs last week.I think there may be some good returns in mining towns, but very risky.

YepI personally like IO for all loans. But if you are not disciplined at saving etc, then maybe a PI loan is safer.

I think the calculation method is outlines in your loan documents. If not, ask them how it is calculated. It will be complex, but they should tell you how they work it out.

asaboveYou can claim costs on a block of land if you intend to build an investment property on it – but it is hard to fund without any rent.