Def talk to a broker. The loans set up like that mean it is costing you money – you should not be paying down an investment loan while you have non-deductible debt.

You must be referring to the 6 year absence rule? s 118-145 ITAA 1997 is the law and it refers to absences, so I would interpret that  you can be away from the property for up to 6 years and still treat it was your main residence.

There are also no time limits on living in the property to establish it as the main residence. Presumably 1 day would be enough as long as it genuinely was your main residence see the ATOs POV in TD51 which lists factors relevant in determing this.

See also TD 95/8 and 95/9 for multiple absences under the 6 year rule.

I am not familiar with that software – are you changing the amount of money put into the deal somewhere?

They can lend the money to you from their redraw or LOC.

It will be difficult for you to get a loan by mortgaging their property as you are not the owner. It may also be easier and less messy to just use a credit card for such an amount and not involve the parents.

It doesn't matter what you declare or what you say is happening, if you are renting your house out it is rented. If you are receving an income from it you must declare it – it is the owner that must declare it in their tax return and unless you own it as trustee for your borther then that will be you. You would be considered as gifting the money to your brother, but still assess on it. And consider that you may not pay tax on the money if you take into account all the costs such as interest etc.

Maybe you could employ your brother to look after the property – that way he could get the money still, but you could claim a deduction. Play around with the figures so it doesn't reduce his centrelink benefits or make him pay tax on it.

Just make sure you plan carefully as it is rare for things to go smoothly.  Assume the worse case. One of my friends has just lost $500,000 on a development of around 6 townhouses – and he is a broker too.

Keeping on buying more may be one way to tackle the problem, but the is only so far that you can go and eventually you will be left with a huge income/capital gains with no flexibility. If you had used a discretionary trust you could give up to $16,000 pa to each kid if they are over 18 and not working (eg maybe while they are at uni) or $3,600 pa each while a minor. If you have 2 this means a potential income of $32,000 pa tax free. Even when your kids get jobs you will still be able to save tax by distributing income to your wife who is on the lower income. With a trust you get the flexibility to chose who gets the income and this can save you heaps of tax – assuming there is a profit to distribute.

hi Jack

Since you have a high income you should be able to knock that PPOR loan debt off in 1 to 2 years. After that you should have considerable cash available so I think you should seriously consider a discretionary trust. You can start gifting cash to the trust and park it in a 100% offset account and this will quickly reduce any losses. it will also offer significant asset protection and long term tax benefits.

Whereas if you get the property 99% in your name, then when it turns positive you will be paying 47% tax on the rent and you will cop all the CGT too. It may turn positive faster than you think once the PPOR is paid off.

There are 2 ways to do it.

1. Both of you take out another loan on the existing property, such as a LOC, and then you borrow this and use as deposit for the new one. If you do this the new loan will be totally separate and if you default the only risk to your ex is losing the money from the LOC.

2. Use the existing property as security for the new one. This means cross collateralising the two. Ex will be a guarantor on your new loan because his security is being used to partially secure the new one.  The risk is greater as if you default on the new property loan the bank could sell the new house or the old house or both.

If I was the ex I would be extremely reluctant to do either, but 1 would be preferable.

Thanks Emma

I read so many posts that I don't remember what the intial post was sometimes.
I would still try not to maximise borrowings and not to use the cash if possible – as you will never know when circumstances will change and Amy may decide to buy a place to live in at some stage. If that were to happen then there would be issues with tax as she would have to borrow from an investment to pay for personal. if she had borrowed max and put the cash in the offset this would result in higher deductions. But this may not be possible as she may need the cash to invest and she may never end up buying a house to live in – but it is good to plan for it if possible