You will have to read the Duties Act NSW

I've read it but not with an eye to considering installment contracts.

I can't see how duty wouldn't apply twice as there are 2 transactions and both would be dutiable transactions.

A standard loan would be ok. But make sure you don't borrow money and park it in a savings account to write a checque. Draw it down with a bank cheque made out to the person you are paying – such as real estate trust account etc. Using a LOC makes this part easier.

That is correct. One trust can distribute to another but there are complex rules to comply with. And If your existing are not in a trust already then this won’t work

Yes that is the case.

Refinancing involves replacing one loan with another so this isn't possible. There are some strategies which involve selling the interest in the property to an associated person such as spouse or a trust etc.

In some state a sale to a spouse can be done without stamp duty. So this offers a great opportunity to restructure yourself tax effectively.

Thanks for your comments. I have been explaining these things so long now I know what is easily digestible.

I must say there are thousands of consumers out there who have it all wrong and will be in serious trouble if audited. Most accountants have no idea. same with the brokers and even the lawyers.

I know one lawyer that transfers borrowed money to a savings account to pay for investment expenses. He didn't know this could remove the ability to claim the interest. Other lawyer friends have no idea about trusts or asset protection etc. Very few people are set up effectively.

Your dog is actually a client of mine. Is his name Boris?

No, I am located in Sydney unfortunately.

You need careful planning and consider the following:

– ability to get finance (most important!) without finance you are stuck
– structure. Sole name, joint names, trust – unit or DT, or company (no).
– injecting capital to the structure – gift or loan (probably loan, but from whom? interest deductibility considerations too)
– asset protection – think of divorce, death or bankruptcy of one or both of you
– land tax
– stamp duty
– GST
– CGT
– Income tax

Lin. Why do you want a trust. Ie what are you trying to achieve ?

eg.

$100,000 investment loan.
$1000 cash.

You could
1. Park the cash in the loan or
2. Park the cash in the offset

Interest result would be exactly the same

BUT

When you put money into a loan this is a repayment, and
When you take money out of a loan this is a new loan

So with 1, you put $1000 into a loan of $100,000 and the balance becomes $99,000.
If you take $1000 out of the loan to buy a new ivory back scatcher the loan will now be 99% investment related and 1% personal related.

Only 99% of the interest will be deductible.

If you were to do that the next month then the deductible portion will be $99,000 – ($1000 x 99%) = $98,001

You can imagine that after 10 years or so you could have a $100,000 loan still, assuming IO, but with a deductible balance of maybe $50,000.

Whereas if you had used an IO loan with a 100% offset then you would have a $100,000 loan with all of it deductible.

You can still claim all the normal deductions if you are not working, but your income will be limited so your may not get much back if any at tax time if you have paid no tax.