You need to consider

– strike price

– term

– how much comes off

– etc

eg a property valued at $500,000 now

You take a one year option to buy it for $505,000 with you paying the equivalent of the loan repayments

or

You take a 1 year option to buy it at market value in 12 months time as determined by the average of 2 independant valuations.

or

You take a 5 year option and have the ability to buy the property for $500,000 with nothing coming off

etc

Not sure what you mean about intention?

When one spouse buys out the share of the other spouse the intention doesn't really matter. It is a purchase of property. If money is borrowed to buy this property and the property is available for rent then generally the interest will be deductible as the purpose of the borrowing is to buy an income producing asset. The same principles apply for the original part of the property the spouse may already own.

The ATO acknowledge that the interest may be deductible – see th ATO ID i cited above for proof.

But don't try this at home without legal advice as there are many issues involved.

You can't transact with yourself.

If he owned property worth $250,000 she could buy this off him for $250,000

Well, any situation in which you are taking an option to purchase someone else's property you would have to consider who else has an interest in the property and is this interest will take priority over your interest.

For example someone may sell you a property, and then before settlement someone else may lodge a writ over the property to secure a debt and this may occur before settlement. In this case who would take priority? According to a recent NSW case it would be whoever had registered their interest first. So if you exchange contracts and don't lodge a caveat someone else could take the property before settlement to satisfy a debt – a debt that you may not know anything about.

Not really.

You may think you are helping the owner etc but you may not know the full extent of their financial problems. If they do down the bank is going to get first take on their property. Then other secured creditors and then the non-secured creditors.

So if you want to proceed you will have to do a title search and see if there are any other mortgages, caveats or writs etc. Do a valuation too. Then you have to get a contract drawn up and make sure you take a charge and maybe lodge a 2nd mortgage or a caveat showing your interest in the property. Consider they may have other non registered mortgages too and then consider if these would take priority over yours. Very complex and legals would be lots of money to do properly.

Very dangerous.

Make sure you get legal advice otherwise you would be just one of many unsecured creditors down the track.

What happens if someone dies and leaves a property with a loan on it to someone is that the testator may or may not deal with the loan in the will.

1. If they have other cash they may direct that the loan on 23 smith st be paid out of the residue of the estate.

or

2. If there is no mention of how the loan will be delt with then the loan goes with the property. In NSW this comes under the conveyancing act. If this is the case then the recicpient will have to take the property with the loan and will have to pay out the loan or apply for their own finance to continue the loan. If they don't then the executor may have to sell the house and distribute the proceeds to them.

There are also tax issues to consider such as when to sell and who gets taxed – the estate or the recipient. This will depend on the circumstances.

With trusts its different as ownership doesn't change. Beneficial ownership doesn't change, but if you are individual trustee of a trust and die then the title of the house etc must be changed. ie the legal ownership must change. There may or may not be stamp duty issues depending on how the trust is set up but should be CGT free.

If a company is trustee then legal ownership can stay with the company. Hopefully the deceased would have arranged for a suitable person to hold or control the shares of the company and the can then appoint themselves as director and control the trust.

But either way the loan on the property will have to be redone. Banks won't allow a dead person to guarantee the loan and dying would be a breach of the loan agreement so someone else would have to step in and guarantee the loan or the property may need to be sold.

many issues to consider.

If the member is in pension phase and the asset is being used to pay the pension then the SMSF won't pay any CGT when the asset is sold. If it wasn't in pension phase then 15% tax on income within the superfund including capital gains, but there is a 33% CGT discount for assets held longer than 12 months.

SMSFs can also negative gear – as in a loss on a property held within the fund can offset other income of the fund

If your wife is 100% title owner then she will get 100% of the income.

Since you will have $800k owing on the new main reisdence you would want to sell your share of the house to the wife and for her to borrow to buy it. She can then claim the interest against the income an then this will release funds which can be used to pay down the new main residence loan.

Its only $12 here

http://www.propertybooks.com.au/productdetail.asp?id=33