You should go and see a tax advisor as you would be required to declare the income from the properties and the CG too.

Transferring them to your wife now would be a CGT event so wouldn't save anything on the tax.

Before bringing the money in you should consider some asset protection strategies and there may be some tax strategies too.

Hi Ziv,

I will be in Osaka around Nov/Dec before it gets too cold I hope. Do you deal in any properties around that area?

If you will be using a company as trustee then the company is merely a legal owner with no tax consequences. Income flows through the trust and is not normally taxed in the hands of the trustee. The income is distributed to the beneficiaries who pay tax at their own marginal rates. If the trustee doesn't make a declaration to distribute income before 40 June (and there are no takers in default) then the 'trust' is taxed at 46%. ie not the company but the trust with its own tax return.

The trust can pay private expenses (subject to the terms in the deed) but these won't be deductible unless they relate to the production of income.

Trusts don't increase borrowing capacity as stated in that book, but they do help by making things flexible. So your trust owned property and had equity but after a few years you had a default on your credit file and could no longer get finance. All that equity sitting there not being able to be used. What you could do is to replace the director of the trustee company and/or units in the unit trust with another willing person who would then use their borrowing power to apply for a loan.

Yes, it can be done. Adding your wife to the loan will complicate things though. There is no need to add her, she can be guarantor. If you add her you will essentially be paying back one loan and taking another with her onlending the money to you – still can maintain deductibility though. You should have a loan agreement with her in place.

But don't use a conveyancer, you need legal advice!

Watch out for the aggregation of stamp duty provisions too.

yes, section 118-145 ITAA 1997

This is generally true, but not always.

for example A and B own a property.

B uses money from a LOC which is taken out in the names of A and B.

B buys a new property in B's name only.

B can claim 100% of the interest on the money used from the LOC to fund this property (if investment).

or

A owns a property and takes a LOC out on this property.

A's husband B buys a new property and uses this LOC to fund it.

B can claim 100% of the interest on this borrowed money assuming new property is an investment.

Here A is essentially onlending the money to B who is using it to invest.

Yes, Strictly speaking I would say it isn't deductible. But as long as you can trace the funds and there is no mixing of borrowed funds with other funds then the ATO may allow it.

You really need to see a tax advisor and to go through it all as if you get this wrong it will cost you tens of thousands over the next 30 years.

Depending on your circumstances the property could be totally CGT free if sold within 6 years of it being rented.

Since ownership is changing you would have to take out new loans. You could treat the existing loans as a 'refinance' so the amount changes. If there were 2 names on title then you used the money for other investments then nothing changes in terms of deductibility. You can still claim all of the interest.