CG's are worked out and then added to your other taxable income. So the main way of reducing CGT would be to decrease your other income as much as possible. To do this you can use some strategies outlined by pwinne above.

Another method is to defer CGT until you will have a low income year. Or maybe exchange contracts on 01 July to put off paying it for another 12 months. You will then have more time to plan on reducing your income that financial year. You may also be able to sell some shares or other investments which have capital losses so that these can be used to reduce the CGs.

Accountants cannot draft legal documents unless they are also solicitors. They can advise you on structuring and who to take what role etc in terms of tax. Solicitors can draft documents such as deeds or contracts, as well as give legal advice, but very few solcitors do their own trust deed drafting because of the complexity involved and the time involved. Most would use some sort of precedent document and then modify it by adding or amended clauses.
 

It makes sense.

Say you have $100,000 cash. If you put that in an interest bearing account at 10% you may get $10,000 pa interest, but you would pay tax on it. Say 30% tax = $7,000 left over. You would also be paying interest on your home loan which is not deductible.

Now say you pay $100,000 into your loan. You will not be earning interest, but will be saving interest. If you are paying 7% interest you would be saving at least $7,000 pa plus the compounding effect.

I haven't read the article but would caution against using a LOC for this. An IO loan with offset would be better.

The process could be sped up by using a LOC to pay for all investment/business expenses which would free up cash to pay down the non-deductible loans first. But his needs careful planning to make it work.

I would suggest you put the money in the offset account until you want to use it. If you want to invest with it you should then pay down your loan and reborrow the money so the intereest in deductible.

There are also considerable asset protection advantages of using a discretionary trust.

Yep.

Renovation costs would probably be only depreciatable. You could only probably claim 2.5% pa for 40 years

Basically if you rent out half of your home then half of all costs associated with the hous will be tax deductible. However the rent will be income and the portion of the house rented out would be subject to CGT. It is the owner of the house that claims the deductions and pays the tax so who claims will depend on who owns.

 year rule only applies to absences.

Not really.

Generally only a percentage of the rents will be taken into account – maybe 80%. Also you will have higher taxes with higher income so this will work against you too.

talk to a broker as each bank has different policies and some take into account deductibility of interest and add back depreciation.

hi Angel.

$80,000 is huge!. I was stung the same way, but only for about $5k and I thought that was bad. I have never fixed a loan since.

One of my friends had a fee of $160,000 to break his loans – and he paid it.

Did you factor in the tax deductions? This could mean a huge deduction in the year of sale.

I would suggest you always avoid cross coll.

It is possibly ok with just 2 properties – but only as long as things go well. If you have a problem and have to sell one property but the other has dropped in value, then the bank may be able to prevent you from selling unless you can pay down the remaining loan. This may not be possible or if possible it could be a disadvantage from a taxation point of view.