Have you considered buying a home, living in it temporarily and then renting it out. This way you may be able to claim deductions and still have the property CGT free. ie you get the best of both renting and owning.

Hi Bacon

There is no right way to do it, whatever you feel comfortable with is the way to go. But I like an IO for a few reasons:
 -with an IO loan you can reduce your repayments enabling you to service more investments
– Keeps your loan balance high so can claim more deductions
– Can also save interest by putting money into an offset and then not lose your deductibility if you take the cash out for personal expenses (which you would if you had paid down the loan).

Putting money in an offset will reduce your tax deductions, putting the money in an offset on a PPOR would be ideal. you could place the spare cash in an ING account, but then you would have to pay more tax on the interest. Not sure which would work out better if you did not have a PPOR mortgage.

I personally would just use an IO loan and pay all spare cash into a 100% offset account. This will work out the same (if you can control your spending) as paying into the loan in terms of interest, but if you were to ever move out, you would have a high loan and therefore greater deductions than you would if you had paid the loan down.

However, if you build up a large amount in the offset and wish to use it as a deposit for the next investment property, you should then pay it into the loan (to reduce PPOR debt) and reborrow it (deductible).

Hi Super

Your unit is worth $400,000. 80% of this is what you could generally borrow without LMI = $320,000. less your current loan of $280,000 = accessible equity of $40,000.

You could then use that as a deposit and costs on another property – subject to serviceability etc.

It may also be possible to just borrow 100% of the value of the new IP too, without using your equity.

Hi

I would suggest you get an interest only loan since you are planning to rent it out. Having a 100% offset account attached would be great as you could still save interest without paying the loan down.

Hi

I am no tax expert but think Captial gains cannot be used to offset income losses. eg if your trust has a property which is negative geared, then the loss is just rolled forward each year until there is income to offset it. Captial gains are not classed as income, so if the property were to be sold, then the loss could not be used to offset the capital gain – the gain must be distributed and the income loss  carried forward.

I can think of a few reasons to own your main residence in a trust.
1) if your property is larger than 5 acres and you don't get the CGT exemption, then you may as well use a trust as you are not giving up much.
2) if your property is going to be lived in temporarily and will revert to an investment property once you move out.
3) If you already own a property which you can continue to claim as your main residence
4) asset protection

Just  be careful. These things often end up with friends no longer being friends. Discuss what happens when one wants to sell, or get out of the deal – how will it happen, what price, what if others don't want or cannot buy them out etc etc.

You can only claim a place as your main residence once you have lived in it. ie you can move out and still claim it as your main residence. But if you previously did not live in the property, then you cannot claim it as your main residence until after you had mvoed in.

No, you generally cannot claim these. They maybe claimable on the sale. But if you are in the business of property investment, you may be able to claim them – check with your accountant.

You could do that, but remember discretionary trusts cannot distribute losses. So if there was a loss you could not offset it against your personal income. When your property becomes positively geared, then you will have a profit which you may have to pay tax on – which you otherwise may not have had to. Then there is land tax, and CGT when you sell.

It may not be a good idea unless you are going to do it short term. ie if you intend to live in the place a short time before moving on.

And don't forget you could also rent the place furnished and claim depreciation on TVs and furniture too.

If any renovations etc were done, then the trust could claim a deduction – depending on what it was that was done it may be depreciation or a repair.