Yes, I will buy them all! I was just waiting for you to drop the price!

Could you please send me an email with your details and i will transfer the money.

Why do you want to pay off the loan? Why not use IO with an offset account and save the same interest but keep funds available for private nnon deductible debt/

Under s8-1 ITAAA97 any expense related to producing assessible income cna be deductible.

But you may have problem. If you have redrawn from a non deductible loan you will be charged one large sum of interest each month. Only part of this will be deducctible. That is easy enough to work out. However if you are repaying this loan by paying PI and/or extra repayments then each of these repayments will be coming off the whole loan. So what this means is you are reducing the investment portion of the loan too and thereby diverting funds away from paying off the home loan sooner. This is costing you money by making more tax payable. This in turn means less money to go off the non deductible debt and compounding over 20 to 30 years this would be a heap of money.

Solution – see a tax advisor about splitting your loan now. Split into the relevant portions and from this point have the investment portion IO and then you can pay down the non deductible portion quicker and save more money.

superAndrew wrote:

I also have a question about the “thumbs up/down” and “star” rating system. Why do some posts have one or the other?

Sorry, misread – Good question!

• This reply was modified 11 years, 7 months ago by  Terryw.

Yes they would jump considerably – if you haven’t renegoitated. It is rare for a loan to go 10 years

But if it does just think what would your rents be like then? Possibly double

$77k purchase
$185
$130 sale
—-
$315k

$250k profit.
take off stamp duty, agent fees other holding costs not otherwise claied,
$40k say

$210k profit
$105k assuming eahld each
50% discount
$52500 income each

So you would pay tax on this $52k
Might work out to be $10 k each assuming no other income.

Very rough estimate assumming you sell on capital account.

July is not far away, could you hold off on exchange?

i am in Japan now – 8% GST on goods is not easy to calculate and most things seem to be GST excluded on the market price.

I don’t think it will have much of an effect, initially it may be a bit of a shock but once people are used to it they won’t feel it.

Yes many issues as Andrew points out.

If it is a trading company this is dangerous.

Stamp duty at market rates.

Who owns the shares? and asset protection.

Land tax – possibly not exempt.

No 50% CGT discount.

Will you be paying market rent?

Possible FBT issues.

Paying for renovations won’t mean a full deduction as this will be a capital expense.

etc

Catalyst wrote:

  i have read that you are exempt from paying CGT if you can prove the property is your main residency for 12 months. So my thought was my brother and I would move into the rear property once completed and then sell after 12 months. 

I’ve never heard of this before!

You should get some tax advice as there are many isssues and you have left out many things. It might be better to transfer now before developing, depending on a few things.

I don’t think these expenses will be deductibe against income as the property wasn’t available for rent. They may be capital expenses and could be used to reduce CGT in the future so keep good records.