Wow, rent money is held on trust for you until released. Don’t believe the sick story (it may or may not be true) but demand they give proper account for the money held and complain to the relevant department in the state they are located in. They could easily lose their licence over this. However if they are dying from cancer they won’t care…[Read more]

DW only those with tax agent registration or lawyers can give tax advice. Even CAs can’t unless licenced.

I think you shouldn’t be taking tax advice from either a mortgage broker or a banker.

Cancel the redraw and Borrow against the equity in the IP as as a separate split, using this for the deposit on the new PPOR.
2 benefits
1) no contaminating of the loan
2) avoids cross collateralising securities

Could you move into coffs IP? You would be paying abou $127 pw instead of $400 pw rent. You could sell the other house, pay off the $132k loan and then pay no non deductible interest. Then borrow up to 80% LVR on coffs to use for investing together with your cash.

Keep in mind if you are not working you won’t qualify for a loan.

sheridan & trish, this sounds like a risky strategy to me. Also doesn’t really make financial sense as your loan payments now would be very low whereas if you are renting at $400 pw you would need to earn much more money to be able to afford to pay this. Plus you lose the main residence CGT exemption.

Why not just borrow against the equity? Or if…[Read more]

Yes I meant future.

make sure the wording of the consent order exludes this.

However, It could still be possible if you make promises or she is able to get a new interest in the property – by helping you pay hte mortgage, renovate etc.

Adam,

I skimmed your article, don’t forget that any costs incurred while living in the property can be used to reduce the CGT too and using a discretionary trust to hold it could result in tax savings by having the capital gain distirbuted to the lowest tax payer in the family group – maybe even to someone with a capital loss which can offset the…[Read more]

There is an example in the law see
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html

Example: You live in a house for 3 years. You are posted overseas for 5 years and you rent it out during your absence. On your return you move back into it for 2 years. You are then posted overseas again for 4 years (again renting it…

[Read more]

It is clear from the Act, you must move back into the property as your main residence. What maybe not clear is what this is. Whether it is the main residence or not would be a question of fact – do you have another reisdence? Are you just camping out in house A while living in house B sort of thing. If you move yourself back in, including all your…[Read more]

Not sure what Adam is saying here, but you only get one main residence exemption at any one time, but you could have a potential exemption between 2 or more properties if both had been the main residence. The election to claim one as the main residence is only made in the tax return of the year of sale.

jasedc5r’s property would probably be…[Read more]

Benny – you have no idea!

There is no need to move back in or even to have an intention to move back in. The relevant piece of law mentions none of this, neither does it state a minimum time period. The property only has to be the ‘main residence’.

see s118-145 ITAA97

Prob not a good idea to sell a main residence only buy further property. You would lose the only CGT exempt asset and would have to pay rent on the new home with after tax dollars.

Shaghai – I would love to go there.

The rules of law in countries such as Indonesia doesn’t operate like Australia. I went to Jakarta a few years ago to help someone who had their property stolen. Similar in Thailand, I know a peron who had their property stolen – forged papers. He has been going through the courts for 12 years to get it back.

Why are you considering sellin?

Yes it could be done. many legal issues to consider though.

See RPI from this forum, he is a property lawyer based in Brisbane.

Yes possibly.

Firstly a banker should not be giving tax advice.

But he is correct in this instance (pretty rare for a banker!)

The purpose and use of the borrowed funds determine deductibility. Security for the loan doesn’t matter.
In this case you are borrowing to pay down a private loan. Interest is not deductible in this instance.

Snow, a trust can negative gear like any tax payer. It is just that a loss in the trust cannot be used to reduce the income of another tax payer.

A trust in QLD gets a separate threshold and separate trusts can each get a separate threshold. But there is a trap for young players as trusts can be aggregated for land tax assessment under certain…[Read more]