Evolve

I am not sure it would be possible to have person A claim the deductions and then person B get all the income or the CGs. There would be not commercially viable reason for A to borrow to buy the units if A wasn't guaranteed the income from the trust.

It could be set up with A claiming the interest on their purchase of the units and then later transferring those units back to the trust – it could revert to a discretionary, but then you would have CGT issues/

Hybrids have their drawbacks, but are still worth considering.

Just on the borrowing side, it may be better if you take out a LOC on the existing property and then borrow the rest as a new loan secured on the new property. This way you can avoid cross collateralisation.

The main thing is to know what it is worth compared to what you have agreed to pay.

If it has dropped then you could lose much more than 10% if you don't complete.

Would you qualify for the loan now? Some of these serviced apartments have great yields, so it may not be too bad.

I agree with WJ

The offset account is a savings account and withdrawing money from it is not new borrowings so there are no tax issues with taking deposits from it.

But removing money from an offset will result in higher interest being payable on the loan it is attached to. If your offset is attached to your home loan then you will pay more non-deductible interest.

A more tax effective way may be to pay down the PPOR loan and then reborrow it as a new separate loan. If the PPOR is in your name only you can on lend to the husband, charging the same interest as you are paying, and he will be able to claim the interest on his tax.

You should get all income and rents placed into the offset account and this will save you interest. the quicker and longer the money stays in your account the more interest you save.

The offset works by reducing the amount of the loan you pay interest on.
eg. If you had a $100,000 loan and $90,000 in the offset, you only pay interest on $90,000.

This works out the same as if you had paid the $10,000 off the loan – same in terms of interest, different in terms of tax.

If you have an interest only loan, then you will not be decreasing the principle. This doesn't matter though as in the end you will have an increasingly large offset account and could pay into the loan at any time – you just don't to keep your tax options open longer.

The savings on a 100% offset account and IO loan will be the same as a PI loan. Providing you are not tempted to spend the cash.

Maybe I should clarrify. I would agree with Jac – use only IO with the offset. I just wanted to show that sometimes it may be necessary to pay down an investment loan so that you can reborrow the money.

But consider the tax consequences.

Say you had a $300,000 loan and paid it down to $200,000. $100,000 off the princple. You then go and decide you want to buy a house to live in, but you have no cash. You can take $100,000 out of redraw and use that as a deposit, but the interest on this $100,000 won't be deductible.

Whereas, if you had used a 100% offset account, the interest savins would have been the same (assuming you saved the extra in the offset and didn't spend it). Your loan would still be $300,000 and you would have $100,000 cash in the offset – meaning you only pay interest on $200,000. You then take out your $100,000 and use it as deposit on the new home. The effect is interest on the full $300,000 is deductible. Saving you roughly $3,000 pa in tax.

its very hard to find things here. Try searching on "living off equity"

JacM – usually, but not always.

Imagine he had a loan of $300,000 and $100,000 in the offset. He wanted to buy $100,000 worth of managed funds. He could:
 A. use the money in the offset, or
 B. he could pay down the loan and reborrow it to invest.

At the moment this would not make any difference. But what would happen if he decided to move into the property and live there – say a year down the track.

If he used method A, he would be paying more tax – maybe $3,000 pa more.

Its a hard decision to make. And it is probably best to love the money in the offset as long as possible until investing.