yeah right. that is like saying restuarants sell food so they need people to buy it so give it to consultants who charge you an extra $10 per meal. This doesn’t matter because their fee is added on to your credit card so you don’t pay it with cash. In addition instead of paying $15 menu price for your fried rice they charge $20 so they can give the consultant an extra $5 commission.

I suggest you immediately get independent valuations done. Then if you have been ripped off speak to a lawyer.

You should not be paying off the house but keeping your cash for future possible PPOR loans. A good way to do this to save interest is to use a 100% offset. Paying into the loan and redrawing will make you pay more tax so don”t do that.

No need to worry about selling yet.

If you take it off the market then you probably couldn’t claim interest costs during this period

There is little to no asset protection with a hybrid because the units are considered property and if they are owned by an individual then they could be up for grabs by creditors. The units also need to be held by the individual or no negative gearing is possible.

But, hybrid trusts do have many advantages.
1. They allow negative gearing, and
2. the units could be transferred to a discretionary trust or a SMSF or someone else without needing to change ownership. maybe stamp duty is exempt or reduced too.
3. the trustee could borrow to buy back the units = refinancing principle. This could indirectly allow you to claim the interest on personal expenses – but the draw back to this is CGT on the sale of the units to the trustee, but this can be minimised in many ways.

Please have a look at this recent WA case where the sellers got into trouble over special conditions:

Dodds v Kennedy [No.2] [2011] WASCA 131
http://decisions.justice.wa.gov.au/supreme/supdcsn.nsf/PDFJudgments-WebVw/2011WASCA0131/$FILE/2011WASCA0131.pdf

Hybrid trusts are extremely complex. You can gift money or property to a trust. If you are gifting real property such as a house then stamp duty would be payable and CGT would be payable if it applied.

To start distributing income to the beneficiaries the trust would have to start buying back the units from the unit holders. This would involved CGT as the units must be redeemed at market rates. There may be stamp duty as well. (in addition the trust may have to pay CGT when it sells the property later so double CGT). The trust may also be able to borrow to buy back the units and to claim the interest on this loan.

If the unit holders just repay their loan to the bank then they will be getting the same income with less expenses which may mean their positively geared. Just think of it as investing into units in a public trust – or shares in a company.

Sounds problematic.

How can you or them protect yourself? They couldn't get a loan to purchase their share without you guaranteeing the loan – and vice versa.

What happens if their spouse/lover/mistress puts a caveat on the property just as you were thinking of selling?

What if one party dies?

What if one party goes bankrupt?

What if one party wants out and the other doesn't?

If you really do want to do it maybe consider using a unit trust to own it so that title doesn't need to change and you just have to transfer units across to a new purchaser

I think you should be able to claim the interest on money borrowed to do the renos, but only from the point when the property is available for rent.

Good work!

Luke,

What are you talking about? More detail needed. there are hundreds of acts, whats the name?