1. You would need to transfer title. Which state is the property in?
2. If you want the interest to be deductible, which you probably would, you wife would actually have to purchase part of the property from you and to borrow to do so. Just adding her to the loan will result in losing deductibility. You could have all the loan in her name with you…[Read more]

Probably on the rental property schedule.
Don’t forget that some things will need to be depreciated.

check with your tax agent.

Generally it is not a problem and can result in some good rates, but there is a risk.

Most loan agreements have ‘all moneys’ clauses which mean that any security you have with the bank will be used to secure all debts you owe to that bank, whether now or in the future.

So if you get into trouble you may come down quicker than if you had your…[Read more]

Yes it is possible. Most discretionary trusts would name a person and then say ‘all children, grandchild’ of the above.

Costs incurred before legal ownership can be deductible if you intend to keep the property to rent out. Its like borrowing to pay the deposit on an off the plan property – this interest could be deductible.

A tax agent or lawyer should be able to advise on that.

Get some tax advice on ‘withholding tax’ – otherwise you won’t be able to claim any interest if you do not withhold tax. There may be an exemption for double tax agreement countries though.

And you cannot claim your own labour.

You need receipts! Tax invoices

Sam, if there will be no capital growth then why bother?
What is the annual return like after all costs?
Could you get similar returns with less risk?
What is the opportunity cost of investing in this?
– borrowing capacity eaten up
– deposit eaten up (and may be a large deposit).

You could claim depreciation

Well they are the owners of the property – this can’t be undone. There may be ways to minimise future effects though.

If one joint tenant dies the survivors share automatically increases.

Without proof of expenses they will pay more CGT. for CGT purposes JT owners are consider owners in equal shares as tenants in common.

Convert the existing LOC into a term loan and set up a new LOC. If you are worrried – do them in separate applications, with the new LOC after the approval of the conversion.

Is it owned as Tenants in common or joint tenants?

The siblings will be up for CGT on the transfer of their shares. Changing title now will also result in stamp duty as well as CGT. To work out the CGT payable they will need access to the records so they can use expenses paid to reduce the CGT payable.

Whether they should transfer title now or…[Read more]

Sounds like she would fail the control test – s1207v(2) Social Security Act
And the source test s1207v(3)

http://www.austlii.edu.au/au/legis/cth/consol_act/ssa1991186/s1207v.html

So that would mean the trust assets would be attributed to mum s 1208E

The trust property would also be subject to CGT and land tax possibly.

Have you considered…[Read more]

This may be better from a tax point of view, but from a social security point of view she won’t pass the control or the source test. The deeming rules may apply to the gift too.

Also from an estate planning point of view this set up has many disadvantages.

Did you get advice before this was done – did she get advice before gifting all her money away?

Costs me about $500 or so for the ASIC fee I think. But you also need insurance, credit ombudsman membership etc

A deed of partition could possibly be entered into so that each party beneficially owns just the part of the property that they take possession of. Tricky though

What is the source of the money in the first trust?

It can be done, but it depends.

But another thing is – if it can be done, that doesn’t mean it is a good idea.

I would have done it differently.

If there is no income then no expenses could be deductible – basic tax law s8-1. If she pays under market rent then expenses claimable would be…[Read more]