hi Darren

Firstly on trusts

Will being a beneficiary under a trust prevent you from getting the grant later on? I don't think so because:

– Without knowing it you are probably already the beneficiary of hundreds of discretionary trusts set up by your distant relatives.

But that is no help, so look at the legislation. In QLD you will need to look at the FIRST HOME OWNER GRANT ACT 2000

http://www.austlii.edu.au/au/legis/qld/consol_act/fhoga2000250/

section 14 "Applicant or applicant's spouse must not have had relevant interest in residential property".

You then look up the definition of 'relevant interest' which has a long list with s8(2)(a) covering trusts:

"(2)(b) an interest is not a relevant interest in the hands of a person who holds it subject to a trust."

Therefore holding under a trust should not prevent you from getting the grant in the future.

Buying in under the trust.

If you purchased the original house under a trust, the trust would be required to pay stamp duty on the purchase and possibly CGT on the sale too if the value has increased – which it may if you sub-divide it.

There would also probably be GST too as the land would be new. If you built the house first and then sold it, there would be GST on the house too.

But if you are all first home owners you should be able to get the grant to buy the house and land after it is sub-divided.

If you buy jointly

 You should be able to get the grant – just once between you all. When the sub-division is complete you can transfer titles into individual names. I think there is concessional stamp duty to sub-divide into the same names, but if you were to sub-divide into different names then full stamp duty may be payable (not sure on this).

A possible way around this is setting up a deed of partition from the beginning and you each owning an exact portion of the block. Eg. if 1000sqm and A’s block will be 320sqm when finished, then A should own 32% of the land and so on. Partitioning will mean each owner will solely own their own portion even though all names will be on title. If this is done then you may not have to pay stamp duty (or just a nominal sum) when it is divided.

What about getting IO and using a 100% offset account to keep all your cash. That way you will save the same amount of interest (or more) and can transfer the money into the home loan if you want to.

The advantage is if you move out you will have a high loan with the cash available without tax implications

The disadvantage is that you may be tempted to spend all that cash 'sitting' there.

http://www.austlii.edu.au/au/legis/nsw/consol_act/ca190082/s178ba.html

Up to 5 years in the slammer (Interest only!!)

exit fees?

Yes, you can reborrow the $10k. The interest would be attributed to the new property. If you are using a trust, then you would lend the trust the money and charge it the same interest as your loan and the trust gets to claim the interest in its tax return.

Cattleya

In that case, Why not just have IO and pay the loan down as a PI and then you could use the redraw (or even better, just use a offset account) for the deposit on the next property – will save you borrowing as a personal loan (and deceiving the bank by not telling them), it will save you interest and fees and be more tax effective.

Strata is when you 'sub-divide' the block into individual strata titles ie individual parts of one building can have separate titles.. Each block could be sold separately. Each part would be a 'lot' of the strata plan.

But with land if you were to sub-divide it, each piece would have its own title. totally separate.

With a 95% loan you won't have any equity you can pull out to invest in managed funds. You will need to wait for capital growth and/or paying down the loan.

Since you may rent it, I would suggest an IO loan with a 100% offset account.

But, you will also be contributing money to invest into managed funds. I guess this is going to be frequent small amounts. It would be good if you could save up the money into the offset account, and then pay it off the loan and reborrow it to invest into managed funds. So you would need a loan with free redraw and an offset account.

Ideally, you would probably want to split your loan into a few different splits. Many lenders allow this at now cost. Depending on how much you want to invest each month, I would suggest one split of around $10k. Maybe another few splits around this amount too. This way you can pay into one of these small loans before reborrowing and keep the majority of your home loan separate. This will result in a better outcome at tax time – especially if you decide to keep the house.

It is not that simple.

Australia has double tax agreements with many countries, but not all. So you could be taxed twice, depending on the country.

Australia does have a DT agreement with NZ. However, even if there is a DTA you may still have to pay tax on part of your income. You still have to pay Australian tax on the income, you just can a credit for the foreign tax paid.

Best to talk with your parents solicitor. It is a bit rude being told you have to wait an extra 3 weeks to move in – that is not what was agreed to. What would have happened if they had already given notice? You parents could have been with nowhere to go for 3 weeks!!