opinions of ATO staff don't hold much weight I am afraid. I had a friend who worked at the ATO for years, he told me about one guy on the phones there who just used to say yes to everything.

The law says if you incured interest on money borrowed to invest then it is deductible.

In your example the husband is borrowing the full amount of the cost of the shares, but he really only owns half of those shares. If he only uses 50% of the money borrowed to buy the shares, where has the other 50% gone? The wife has used it to buy her 50%. So essentially he has onlent the money to the wife to buy the shares.

I would say there is a strong case that the wife can claim 50% of the interest in this case.

1. I do not think there are any tax benefits in renting P2 out first, other than the normal negative gearing issues. There could be some disadvantages though. Once you live in a property you could class it as your main residence and be later entitled to a CGT exemption. It cannot be your main residence until you live in it (bear in mind you can only have one main residence).

2. No, not true. ATO looks at the purpose the funds were borrowed for. In your case you have borrowed to buy the property. if that property is a rental then the interest on the loan would be deductible. However, if you have redrawn money from the loan this may complicate things and the interest on this redraw may not be deductible.

3. You will be possibly moving out of both properties and renting, so i would suggest you do not pay any loans down. Use IO loans on both and have a 100% offset attached. put all cash in the offset against the property you are living in, and if you change, move your cash to the new property you will live in.

For the new property i would set up a LOC on P1 and then use this as 20% deposit on the new one and then take out a separate loan. Keep both loans secured by just one property. ie no cross collateralising.

I would suggest you pay market rates for the land. If the owner has a debt to you of $80,000 then you can pay value less what he owes you. Its as if you have already paid $80,000 deposit.

Say you buy a property with someone 50/50. You borrow 100%. Of but you only own half of the property so you can only claim 50%. Makes sense I guess, but the tax deductions for the other 50% are wasted. You could argue that you borrowed the other 50% and on lent it to the 2nd person. Who used it to buy their share. They pay you interest and you pay the bank interest = your income from interest is the same as your expense for interest, for this person.

Amy, yes.

Doesn't sound right to me either. I would argue that the person on the loan is borrowing on behalf of the other person, as bare trustee, and therefore she is entitled to claim the interest.

I got rejected for my first loan, and never approached another lender, just giving up.

I wonder what that property would have been worth now.

Probably best to pay off your non-deductible mortgage first. If you want to invest, then reborrow it and set up a new loan account. This will save you tax.

Purchaser is responsible for paying the stamp duty. Its up to you to negotiate it or factor it into the price.
You will need a conveyancer to do the transfer and need to talk to your bank about changing the loan.

Yes, transfers between spouses in VIC is exempt from s tamp duty
s43 of the Duties Act 2000
http://www.austlii.edu.au/au/legis/vic/consol_act/da200093/s43.html

I would say generally that it is only the title holder that can claim the interest and also all costs. The other person just assisted with the borrowings and has essentially onlent that money to the title holder to make the purchase. This might be different if the title holder is acting as trustee for the 2nd person though.