When did you buy the PPOR? It it was before 1985(??) it may be CGT exempt.

Transferring to a trust will enable the trust to claim the interest, but it would probably be negatively geared and trusts cannot distribute losses so the trust will need other income to offset the loss or you would need to roll the losses forward to be offset by gains in future years.

Also, you may have to pay more land tax if you use a trust.

it is still worth looking at, but you need to bear these additional costs and problems in mind when deciding,

If you were to increase your existing loan to 95% you would generally only be charged LMI on the extra portion.

Hi

1) It is generally only possible to get one offset account per property. Some allow more than one – maybe Bankwest off the top of my head??? But your would need to split the loan into 2 and have one offset against each portion.

2) All parites need to be eligble to get the FHOG I beleive

3) I think you can just split the expenses donw the middle and you receive half the market rent and claim accordingly.

4) If you were to get a LOC you would be borrowing the money 50/50 really. But if you were to use those funds on your own it would be as if she is lending you money and therefore I think you should be ok to claim the interest – check with your accountant first.

Trusts don't pay tax.

If the profit is not distributed the trustee is taxed on it at the top marginal rate. So if you distribute to another trust, that trust must then distribute it. Worst case, you could distribute it to a company and cap the tax at 30%.

You can pay any bills in any manner you can negotiate. Your trust should be only paying bills for that trust though.

It is best to reduce any non-deductible debt first. And a good idea is to never pay down a loan as once you put the money in, you cannot access it again without tax consequences. The best idea would be to use a 100% offset account so you still get the same savings in interest, but without the tax problems.

Hi Luke

With trusts they must distribute any profits each year, otherwise the trustee must pay tax on the profits at the top tax rate. Trusts don't have to have cashflow to survive. You could negative gear, but the loss will be quarantined in the trust until future years when a profit is made – you would have to inject cash into the trust to pay the shortfall (gift or loan it). Other trusts can be beneficiaries, but the incomes will still need to be distributed each year.

A Vanuatu company – keep the profits offshore in a low tax country

I was just reading about this today on the http://www.bantacs.com.au site. There is a PDF document on property investment.

Going from memory, it seems that if someone is building with the intention to sell, then they need to register for GST if doing more than one property. There will be no CGT in this case as the property is an active asset. The profit is just income with no 50% deductions.

But if the intention was to rent the property out long term, then there would be no need to register for GST and the 50% CGT reduction would apply.

I think your parents need to see a good accountant and get some good advice.

Sounds alright. Where is the house and what is the option fee requested?

Hi

Are you saying you wish to borrow to pay IP expenses from your LOC? That is a good strategy, especially if you have non-deductible debt. I think most people would be fine with this.

Are you also asking if it is OK to borrow to pay the interest of an IP loan? I think this is possible myself and have sought advice on it, but apparently not all accountants think this is ok because of their (mistaken?) take on the capitalising of interest legal case a few years ago. (forget the name of it now). But  you read that case, if you can find it, then you will see it said that if is ok for a business to borrow to pay for expenses, including interest.