say you have loan on your home and a  loan on your IP. Your IP is rented and you have equity in your home and the ability to service and qualify for a LOC.

What you could do, after careful structuring advice, is this:
1. Put all rent from the IP into your 100% offset account attached to your home loan.
2. Pay the interest on the IP loan with money borrowed from the LOC.
3. pay all other expenses associated with the IP by borrowing from the LOC.

The result is this:
A. The interest on your home loan rapidly decreases because all rents are going into offset
B. Cash you would have used to pay rates etc is freed up to go in the offset resulting in even more interest savings on the PPOR loan.
C. Interest on your IP increases because you are borrowing to pay investment expenses.
D. C results in increased tax deductions
E. Get a tax variation so you save tax weekly and this will result in even more interest savings on your PPOR loan.

Then repeat the process. The more investments you own the quicker you can pay off your PPOR.

You must be very careful how this is set up or the ATO could disallow it.

The power of positive thinking/?

You should be right I think as you have fully repaid the funds borrowed for personal use. So when you borrow for investment purposes 100% of the outstanding balance will be for investment.

Do a search on Steele's case.

You probably couldn't claim the costs associated with the land as you have no intention of making a profit out of it.

If the trust is purchasing a rental property then the stamp duty could be deductible against the capital gain when sold. if a person is selling to the trust then the stamp duty may be deductible against any capital gain if it was a rental.

Just think of the trust as a separate person – which it is for tax purposes (but not legally).

If a person buys a property and rents it they can generally claim the interest. Generally they can also claim the expenses too.

If the trust is renting the property to a beneficiary or trustee just be careful and get your accountant's advice first. There is a chance the ATO could claim it is a scheme.

Also bear in mind that if your trust has no other income it is probably going to have losses – which won't be offset and these will need to be carried forward. This may also mean you need to make a family trust election too.

a. Stamp duty is a capital expense, so it could only be claimed against any CG when sold.

b. Depends what you mean by "we". You as an individual cannot claim interest on loan the trustee takes out to purchase trust property. The trust would claim the interest. If the trust is a unit trust and you  borrow to buy the units you may be able to claim the interest.

c. any expenses relating to the purchase or operation of an investment property can be claimed  – by the owner of the property.

Just think of the trust as a separate person (for tax) – that will make it easier to get your head around.

if its built in then i doubt it. That is really false and misleading. Someone could get into a situation where by they end up paying more tax because of this.

Hi Newdawn. I think you are referring to my reply to you???

If so, then Loan 2 is a LOC which will be used only for investments. so interest should be deductible. It doesn't matter what the property securing this is used for, it matters what the borrowed money is used for. So changing your current home from PPOR to IP won't affect deductibility.

What you are doing with Loan 3 is to borrow money to pay for expenses on the existing PPOR. The interest on this loan is attributable to the PPOR so it won't be deductible. But when the PPOR becomes an IP it should be deductible.

If you want to do renovations on the current PPOR you could take money from loan 3. But you must never use loan 3 for your new PPOR or you will be mixing business and non-business.

You should never use redraw on an investment loan . This will muck up tax workings. If it is a personal non deductible loan then it will be less of a problem.

You should be able to claim interest on a property before it is available to rent if intended as a rental. Talk to your accountant. If not then all you have to do it to put it up for rent and put the rent up $100 more per week so no one will take it.

For CGT you would probably only need a valuation if you start living in the property or cease living in it. CGT is usually based on the purchase price and selling price.

Ask for 0.80% of on your LOC if your total borrowings are large. LOCs are usually 0.1% higher so they can discount more.

heathers – sounds better if you were to just join a bank!

Banker – this sounds like a good way for sammmeee to proceed in this case. Avoids the break fees but still allows sammmeee to get away from them for further borrowings.