Living off equity is a great strategy. Borrowing for living expenses is not deductible, but things can be structured so that you are borrowing to pay loans and then living on rents, so it can be deductible. The trouble is not bank will likely lend to you these days unless you have a good reason for needing the money. Borrowing to pay interest or for living expenses are no longer good reasons.

Hi Luke

Why not apply for the FHOG? For tax purposes you can't claim a place as your main residence until after you live in it. If you lived in it for 6 months you could rent it out and retain it as your main residence and it will be CGT exempt for up to 6 years. You can also get the stamp duty concessions and FHOG.

If may be a bit disruptive to your family life, though, as you will be moving 2x in 6 months – in and then out.

Yes the best way is to set up a separate loan on the PPOR and then use this as deposit for the new one. No use in using savings if you had it as you should be paying your PPOR loan down first. The separate loan doesn't have to be a LOC (usually a higher interest rate), it can be a straight IO loan with redraw. Most banks offer these.

You should seek legal advise asap. Usually finance clauses have an expiry date well before settlement. If you haven't notified them that finance was not approved then you may be locked in to the purchase. Depending on which state you are in you may have just 14 days to settle if they issue a notice to complete. If you don't settle in the time they can keep the 10% deposit (or sue you for it) and try to resell and sue you for any short fall if they sell it lower. So quickly see your lawyer (not conveyancer) and take some advice.

Might still be a good idea to try a land tax specialist lawyer as you never know you may find a way out of it. It sounds strange to me that you are not exempt – but I don't don't much about land tax.
(One of my clients tried to argue he was running a business of bee keeping/honey production and tried to get out of it that way)

She can, but there are tax consequences. Non residents have to pay 29%+ tax with no tax free thresholds.

It is good to have the option to distribute to them even if you don't as the rules often change and it may be beneficial in the future.

Council probably

Hi

I think this is the relevant section from the Act linked above, Schedule 1A:

(7) Income may be derived from the use or occupation of the former residence in a tax year if:

(a) the income is derived from a lease, licence or other arrangement under which a person has a right to occupy the former residence and the total period for which any such right of occupation is conferred does not exceed 6 months in the tax year, or

(b) the income is derived from any arrangement under which a person occupies the former residence, but the income is no more than is reasonably required to cover council, water and energy rates and charges and maintenance costs of the owner in respect of the residence.

—-

I think if you had a lease of 6 months then you may fall within these guidelines. After the 6 months is up issue another 6 month lease may still be allowable.

I agree with crj you should speak to an expert and land tax as it could save you a fortune.

Its a difficult situation. Ideally you could move in for a brief period and then out again to maintain the CGT exemption and then sell later when prices rise again. But you don't want to get to the point where you can't afford it and over stretch it and then have to do a firesale.

Personal loans are usually short terms like 5 or 7 years max. That means the repayments are very high and this will affect serviceability much greater than a home loan of the same amount.