I think it would be claimed off CGT in the future – unless you are in the business of buying/selling property

Swampy,

In NSW there are some exemptions for temporary absence from main residence. It is much more complex than the CGT exemptions though. I can post details if you can’t find it (am overseas now)

Since both people are legal owners both must be on the loan or loan in one name and the other giving a guarantee – but this is likely to require a credit assessment too.

Probably best to speak with a broker as small defaults can usually be overcome.

(ncidently, this is another good advantage to use a trust with company trustee – you can just change people around without having to change ownership. but may not be suitable if owner occ)

A lease is a legal document, an agent wouldnt be allowed to add clauses unless probably allowed by the residential tenancies act.

Alexia

Why is it different under a company or a trust? Your company or trust would also want to reduce taxable income wouldn't it? Otherwise you would end up paying more tax.

There are a few other issues to consider such as tax. Since the existing property is an IP tax issues will probably no arise. You would just use redraw and have one big loan. You would the just have to apportion the interest between the two properties. If the first property was a owner occ you wouldn't want to do this though.

If you use redraw I would just take the deposit from this loan and then borrow the rest from another lender – or even the same lender. It is possible to use the same lender and not cross coll too.

Also, when you said you have been paying the loan off, I think it may be best to use a IO loan with a 100% offset account rather than paying a loan off. Paying loans off ties up you money and using an offset account can acheive the same result but in a more tax effective manner.

The mum would likely have to give a guarantee, but being vendor finance maybe this could be avoided.

Realistically, if something does go wrong the trustee in bankruptcy are not really going to be chasing anyone for $10k as it would be considered too small and not worth the bother and expense

If this was set up with the intention to put property out of reach of creditors it may be able to be voided under the Bankruptcy Act if your friend later goes bankrupt.

You also have to look at uncommercial transactions. Is he paying market rent etc to the trust. Also have to look at gifts to the trust – where is the $10k now for example.

But if it was just a discretionary trust in which his role was that of a potential beneficiary then it may work. If he would go bankrupt the trustee would simply consider him, but make no distribution to him until he comes out of it.

I think Alan Bond went bankrupt 10 years ago now and his friends were providing him with gifts etc of meals at lavish restuarants etc. The trustee in bankruptcy tried to get this classed as income, but failed. His family also controlled many trusts and he was allowed to use trust assets etc too.

negative gearing is a good way to save tax, but this may not help you save in child support. I am not sure, but they will probably have a formula to add back any negative gearing benefits so that you would have to pay on gross income before deductions.

Yes, I agree with Jamie. Fix it now before getting more tangled. Or fix it at the time you go for the new loan.