Roughly 4-5% of the purchase price.

You would need to approach banks in the country in which the property is located. Aussie banks here cannot help. Most would require you to be working in the country too.

Not necessarily. You can only claim one as your main residence at any one time, but you can chose which one (with the least gain).

Not really. Many banks still assess you on the PI repayments – at a higher rate usually. But you can take into account potential rent for the new property which can make a big difference – and some banks allow you to take into account depreciation and interest deductions.

I would not rely on your accountant or you could be paying a lot more tax than you should. Go to the ATO site and get those booklets v8ghia mentioned, then look up the Tax Rulings mentioned in the relevant section. Shouldn't take too long to find and you will be educating yourself on the way.

Hi Pat

You have set it up similar to the way in which I would do it for myself.

I would have IO variable loan on my home loan with a 100% offset account attached. All wages and rents and spare cash should go into this. Use credit cards with points to pay for everything and this will keep your money in your account longer, saving more interest.

Then, if there is equity, set up a LOC for this. This LOC should only be used to borrow deposits and costs. I would also borrow for all ongoing costs for the investments from this (rates and insurances etc). This will free up more cash to pay into the offset saving you non-deductible interest.

Furthermore you should talk to your accountant about borrowing to pay the interest on your investment properties.

For the investment properties, I would get an IO loan. As the values increase I would look at getting a LOC on any equity.

If you are self employed, look at borrowing all business expenses freeing up even more cash to pay off your home loan. Have a look at the latest newsletter at http://www.bantacs.com.au for information on doing this.

Whether it is a good idea in selling your PPOR to a trust will depend on the current loan on this property and whether you wish to continue to live in it.

For future properties, use the LOC for the 20% deposits and costs and then get the remaining 80% as an IO loan.

Once the PPOR loan portion is paid off keep on using IO loans with a offfset account attached to one of them. Never pay down debt.

I am not so sure you will be safe.

You are essentially borrowing money to invest into a bank account. If you move the money from the bank account if will no longer be borrowings and so the connection may be lost.

If you do wish to do this, see the advice of your accountant (in writing). Do not put any other money in the offset account or you will be mixing borrowed money and non borrowed.

A better way to do it may be to put the money back into the loan and redraw it when needed – even if you have to pay a $20 redraw fee. An even better way would be to just use a LOC – even if you have to pay 0.10% more.

And read all the articles in the newsletter at http://www.bantacs.com.au because a few years ago Julia wrote about a legal case involving a Canberra person who did what you describe and was denied deductibility because they borrowed money and put it into a savings account then wrote cheques – your situation may be slightly different.

Also have a look at the next article in the Bantacs newsletter: Shifting Non Deductible Debt to Business Debt

Hi CJ

Yes you can claim interest on vacant land. Do a search for "steele" on the ATO website. The was a legal case involving someone called Steele and the claiming of interest on vacant land. Steele won!

It is possible, but difficult. I haven't done it myself, but some of my clients have purchased propeties considerably under bank valuation – one guy I was talking to this morning paid $180,000 with the value at $250,000. Another purchased for $40,000 for cash with a valuation soon after, for mortgage purposes at $120,000. etc