I assume that the granny flat is on the same title as the house? If so both tenants will need to buy the wholre property jointly. Or maybe you are approaching each separately about buying the whole place??

1. A contract for the sale of land.
2. They would have already entered into an agreement to buy and exchanged contracts. If they did not follow through and settle then they may lose what they have put in. But this could be challenged in a court as it may be inequitable.
3. Maybe
4. The biggest thing that can go wrong is that they stop paying you and you have to 'evict'.
5. Maybe work out some figures and then go to see them.
6. yes
7. Possibly means they are on a low income which may mean you need to assess whether they can afford to buy the property.

Also you must think about how much you are potentially losing. What if the property increases in value. You won't benefit but the tenants will so you are essentially giving up future capital gains to save some minor expenses now.

You also have to look at if you need a credit licence to be able to offer credit.

Might also want to consider a lease option.

Taking money out of a redraw is considered new borrowings. So I agree with amie.

Only the interest on the $15k would be deductible.

Yes, tax is much different

Children can only earn a few hundred from passive income before they get hit with penalty tax.
Children can get access to adult rates if they are physically working however.

No, I was assuming the children were not working. But they could be employed by the business company.

I was referring to them being beneficiaries of the trust that owned the property. (a company should not own property because of tax reasons).

Incidently if both you and your wife owned a house each and used them as the main residence then only one would get the CGT exemption.

You have to look at the terms of your contract.

Generally they cannot pull out. But if you have breached some terms then they may have a way out.

Check with your tax advisor.

But, as long as your are payng the interest each month then you should be able to keep borrowing to pay investment expenses. Put all rents and incomes in the offset on your home loan and only start to pay down the investment loans after you have no more non deductible expenses.

I have been in Japan for a few weeks now and first lived here in 1990. Prices in generaly have not risen since 1990 and some things have gotten cheaper. There is a problem with deflation and widespread economic pessimisim. I don't see things improving in the near future. Not the place to be investing in I think.

Christian,

5 years is a long time! You would be better off in some sense, but also could be better off in selling and doing another project (or 2) in the meantime.

One is a sale the other is an option to buy

I am sure Paul will post here shortly, but You may need to be licenced to sell under an installment contract.

This won't free up borrowing capacity as you will still be the legal owner and have your loan in place until settlement.

1. depends on the contract
2. depends on the contract. The buyer may need to be compensated if you terminate though.
3. put it in the contract or build it into the price

5. Yes it would be for the extra work. $500 to $1000 approx.

Have you considered a lease option?