Not really

Because you haven't factored in the income from rent.

Say the rent is $14,000.
Interest is $16,000

That means there is a $2,000 loss. Half each.

Husband's share is $1000. If he is paying 30% tax, then approx $300 back.

very approx tho.

Kaatje

You can gift things to trusts. Though this shouldn't change the tax aspects.

What is the date of the finance clause? If it has expired and you did not notify the other party, then it is no longer a condition and you are locked in and you are in a very dangerous situation.

You are very brave in not chasing up the broker to find out where your loan was, especially if you were supposed to settle so soon. I think the broker may have been slow, but broker's do not guarantee loan approval and therefore I am not sure if you have any grounds to complain. You need to keep on top of these things.

Also factor in the amount of interest you are saving by not having the loan drawn down yet.

Yes, don't just decide on rent.

What if the place was a dud and the rent didn't go up for 10 years.

You want some capital gains – probably more so than rent. CG will make you rich,

Hi

I think you have missed something!

but first, let me try to summarise what you are asking…..

Trust A has a profit of $100,000 in one tax year. You want to distribute this profit to trust B – thinking trust B will buy a $100,000 house and therefore have no profit and no tax.

If this is the case you must realise that a house is a capital asset and therefore not claimable in full. Depending on when it was constructed you (or the trust actually) may be able to claim depreciation on the building at the rate of 2.5% pa and depreciation on fittings. The trust could also claim council rates, insurance etc. So there would still be a huge profit there which would need to be distributed.

Also the rent should be factored in. Since you are third parties you may have to pay rent to your trust. If you don't claim rent you may not be able to justify claiming the deductions as it is not a commercial arrangement.

There are also fiduciary duties of a trustee to maximise the profits of the trust. The other beneficiaries may not appreciate the trustee, or directors of the trustee, staying there rent free – but this will depend on the wording of the deed etc.

And then there is the general considerations of buying your PPOR in the trust. This is not usually recomened because:
– you pay land tax
– you will not be utilising your CGT free status
– In the long run you may need to pay more tax as rents rise

If you bought under your own name then no land tax, CGT free and no income tax as you are not paying rent to yourself. But there is no asset protection.

And, why have 2 directors in your trusting company? This just doubles the risk. If the business goes down both of you going down. I would consider having just 1 director and keep the other person free for the future.

It is not an ideal set up, but you are stuck with the fixed.

I would suggest you change all loans to IO, if not already, – will have to wait for the fixed period to expire. Then set up the offset on the one you are living in. If there is enough equity at this stage, then set up a LOC as well and use this for investment expenses.

When you decide to buy the new one, reassess.

I also would not suggest paying down any loans as you will want all spare cash for the new one.

Hi

You don't have to cross collalteralise the loans. You could set up a LOC on one property and use this as deposit for the new one, borrow 80% of the new one as a separate loan. All loans can even be at different banks.

You could transfer the existing house to a trust. But this would result in stamp duty and legal fees as well as possible loan exit fees and app fees again. You would also need to re-qualify for the finance.

Trusts losses cannot be used to offset your other income. A way to do it though would be to use a unit trust and borrow to buy the units. But this will leave you in a very inflexible position little different to holding the property in your own name. No tax flexibility and no asset protection.

I think it best to look at using a discretionary trust and then rolling over the losses – which should be minimal in this climate – and/or look at ways to divert other income into the trust to use the losses and save you tax.
Whether this is beneficial or not will depend on your circumstances. You will need to weigh up the costs to do this with the tax savings.

The trouble with selling is all the costs involved.

Why not buy the future PPOR as your next IP, then move into it later when you need to.

mrproperty.

You may have to get a bit creative. Tax deductibility is determined what the borrowed funds are used for. So you could take out all of your offset money and use that with no issues as it is not borrowed. Then set up a LOC on the property and use this for investment expenses. This will free up money you would have used to pay into your new home loan.

Put a notice up on the notice board (friend of mine did this an got a unit cheap) and approach the managing agent – if there is one who does most of the building rentals.