Certainly not!

Completelyy different products and you can get into a lot of troube by using a LOC.

Sorry, and the answer to that question:

1. No. A taxpayer's purpose of 'paying their home loan off sooner' does not mean that Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936)¹ cannot apply to an 'investment loan interest payment arrangement' of the type described in paragraph 3 of this draft Determination.

see http://law.ato.gov.au/atolaw/view.htm?docid=%22DXT%2FTD2011D8%2FNAT%2FATO%2F00001%22

I should point out that I don't support living off equity in most circumstances, especially in these days of low growth. But doing it properly it can work – for a while at least. And rather than living off equity living off rents or dividends and letting loans capitalise may be a better way to proceed, especially if you have no other income and no outstanding private debt.

I mean, set up  the appropriate loans, and not make any payments.

There is a huge difference!

I imagine any selling costs (and other capital costs) would have to be apportioned between time lived in v time rented. Don't know for sure though?

Rob?

I am concerned by this comment. What do you mean – are you talking about adding the wife to title? Mortgage brokers cannot give tax or legal advice and I would be concerned about deductibility of loans if you do transfer and get this wrong. eg If you transfer for no consideration will her half of the loan be deductible?

You would be liable for all expenses up to the end of your lease or until they find a new person to replace you.

But, the agent also has a duty to minimise costs – they shouldn't leave the property empty just to extract money out of you.

Morts, not sure where the fraud and negligence came into it.

With a negligence case you would, if lost, have a judgment awarded against you. This is what we are protecting against – bankruptcy. If you don't pay a judgment debt there are a few things that can happen and all of them involve the seizure of your property. If you don't have enough propety then you would generally be bankrupted. This is where the trustee in bankruptcy can look at past transactions and commence legal action against wife etc who owe you money or hold assets on trust for you.

Fraud is a criminal act so you could face gaol as well as civil actions to return the money etc. There is also the proceeds of crime legislation which enables police to seize property which was purchased with money made from crimes. So same as above but worse.

I think it would not be possible to will an asset to a SMSF for a few reasons. SMSFs are there to provide for the retirement of the members – this is the sole reason. So if the member dies who are you providing retirement benefits for – death is teh ultimate retirement. You would be crediting the account of a surviving member – and this would be a contribution. So you would have to meet all the contribution cap rules etc. A residential house would also be against the rules too, but you would be a related party.

The testamentary trust would work well and may even assist if you were to later remarry and then divorice. But only slightly. If would assist your children more if they were to later marry and divorce (because the assets of the trust would not have been built up by their efforts).

There is also extra ta benefits- children can receive income from a TT at dult rates meaning approx $16,000 per year each. This becomes $20,542 from next year. That is huge. Imagine if you rented the house out in the future and had 2 kids – your family could receive $40,000 pa in rental income tax free.

It would also show up of the credit report of the individual who is guaranteeing the loan.

Your broker is right.

You accountant is wrong. Or, I should say you cannot redraw the money and use it for the new property because the new property will be a personal expense.