I have had a PM from Godhav re a separate matter and and I think he or she is legitimate.

Yes, you can only claim one place as your main residence at any one time. But the election is when you do the tax return after you have sold one. So you should work out which one to claim so that you save the most tax.

Depends on a number of things.

What is ideal from a tax point of view my not be ideal from an asset point of view or land tax or stamp duty etc.

Some things you could look at:
Individual – get the CGT exemption if main residence

Discretionary trust – greatest flexibility, but not able to use any losses to offset your personal income and will pay more land tax in most states.

Fixed Unit trust – may be able to borrow to buy units and claim interest, may get land tax threshold. No asset protection. But may be able to move units to a discretionary trust later on with no stamp duty.

Company – not recomended for tax reasons (unless acting as trustee).

Also consider finance – hardest is the unit trust.

Also consider succession – if you die trust assets don't form part of your will

If there was no section 32 attached to the contract at the time of the contract being entered into then the purchaser may be able to rescind the contract under certain circumstances. So best to seek legal advice asap.

I think your trumpet needs tuning!

Think about this logically.

What if the person were to use extra funds to pay down their home loan and then decide to move out and rent it and to buy a new PPOR?

There would be a huge tax disadvantage.

Also, where is the person supposed to keep their spare cash? in an offset on an investment? this would save them interest which would be deductible and thereby cost them more in tax. Best to have the offset on the non-deductible debt.

For what its worth, I would suggest the OP get an offset and pay all spare cash into it. Ideally then borrow against the PPOR and set up a different split to use a deposit for the investment. If there is not enough equity then maybe have to pay down the PPOR loan a bit.

Having the offset makes it more flexible.

A business is essentially worthless to a bank. There is no security of any value. What they may lend on is the real property part of it.

What would the value of the house and land? It would probably be a low LVR too because of the size and the business being located on it.

You can only count CGT exemption for one period. So one of the properties would be subject to CGT. The good thing is that it may be possible to chose which property.

See a quantity surveyor for a depreciation schedule.

Changing names on title is not a simple thing. I would result in stamp duty in nsw, but if your property is in VIC you may be in luck. You will need to see a solicitor to do the conveyancing, you will have to buy out your spouse and borrow to do so the loan on this should be deductible interest. This will free up cash and increase your deductible debt. You can take the opportunity to redo your loans to be more effective too.

Based on your figures the property is likely to be returning positive income before taking into account depreciation and other non cash expenses. These are depreciation of building, depreciation of fittings, borrowing costs, travel etc.

I would suggest you get a depreciation schedule done.

Income – Expenses

Rent = $18,460

Expenses
Interest = $20,365
Other (say 20% rent) = $3720
Total Cash expenses = $24,085

Cashflow = income – cash expenses = -$5625 pa before tax.

Taxable Income includes non cash expenses
So expenses + Depreciation + borrowing expenses too.
= $24,085 + 7,847 = $31,932

Taxable income = Rent – Deductions = $18,460 – $31,932 = $13,472 Loss

This loss will come off your other income.

If you were on the 37% marginal tax rate then you may get back 37% or nearly $5k.

Tax savings can be used to work out total cashflow.

Cashflow above was – $5625.
So after tax is taken into account it would be slightly negative.

But this is estimating expenses such as insurance, rates, repairs etc and guessing your tax rate.