Slow down there!

There are a few issues here.

Firstly you could sell your half to your wife – but many complicated and costly issues.

But things might not be that bad.

At the moment you have created a mixed loan – most probably non deductible as it related to the purchase of the house which is owner occupied. This interest may be deductible once you move out and rent it.

The other part was money borrowed for the new IP so this portion should be deductible.

But the problem is you are probably paying PI and it is a mixed loan so that would make it hard to apportion.

I would advise you to immediately convert the loan to IO and maybe even consider splitting into 2 – the redrawn portion used for the investment and the rest. Have the offset account set up on the non deductible portion and problem almost solved.

Then when you move out asses whether you would be better off selling it to your wife.

It is, but what was the company formed for?

And why would you want to buy in the company?

Many issues.

First determine what effect this will have on their pensions.

Then if you were to buy part of the house, what about accessing equity down the track – all owners must go on loans. If it is a rental then no PPOR CGT exemption for you and what was once fully exempt becomes partlially exempt.

Stamp duty on the transfer.

Estate planning issues.

Asset protection issues – if you default parents won't have a place to live maybe.

Perhaps getting them to assist you into a property may be less messy. parental guarantee or even a loan may work out better.

As far as I know there are no land tax exemptions In VIC for land owned by a company – even when the sole shareholders are living in the property.

If the company was acting as trustee then this is different – depending on the trust.

Thanks Richard.

Yes you could have an option to purchase part of a property. There are many ways to structure the option and strike price. could be based on an average of 3 valuations, cPI increases or some round figure. cost to prepare an option agreement would be around $2,000 to $3,000 plus disbursements and GST.

Richard – what was the record number of properties securing one loan?

Sounds like the broker is inexperienced and/or doesn't understand structuring or tax.

Yes it is normal these days. But I don't charge anything at the moment. I have been meaning to implement something to stop the time wasters but haven't got around to it – not that I get many.

You need to look at the foreign investment rules if your Singaporean friend is a non permanent resident. Depends on her/his visa.

Don't put it in the loan as that will create tax problems. Deposit = repayment and withdrawal = new loan, so you could ruin deductibily of the interest once you withdraw the money.

A look at 100% offset accounts would be the way to go

You can't do it without stamp duty, usually. You enter into a contract to purhcase and then quickly sell the same property. At settlement you organise it to all happen simultatenously. It will be a crowded table with cheques being handed around but at the end of it you should have a cheque left in your hands but no property or loan. However if the end purchaser doesn't settle you are in deep trouble.