James

Are you saying you are going to live in the property? If so, negative grealing wouldn't apply? (or maybe you will move in and out before renting it and then claim the main residence exemption on CGT).

There are also tax consequences to be considered. You cannot claim a property as your main residence until you live in it first. If it is not a main residence you may have to pay CGT if the place is sold.

I would ask why are you paying PI on your loans?

I assume your loan on your own home is paid off, but it would still be an idea to keep all loans IO and pay any extra into an offset account linked to one of these. This would be better for tax reasons if you ever needed access to those funds for non-investment purposes, it would also allow you to use the funds saved in the offset to cover the repayments in an emergency and it would allow lower monthly repayments.

hi Trustie

Sounds like a good deal to me. If your daughter can pick it up for market value, the combined value of your properties should be higher because of the development potential. Even if you do nothing for years to come it is possibly better than buying 2 separate properties..

What you could do to help your daughter is to lend her the money over what she can borrow. But get contracts etc drawn up properly for tax reasons and legal reasons (you could have a falling out, and/or one of you could get into trouble with others).

If you are contemplating developing in the future, it may be wise to speak to an expert accountant to work out whose name the new one should be purchased it – yours, daughter's combination or trust etc.

First of all, do not beleive anything an agent says.

You have signed a contract and it is still an offer to the other party until they accept it. They accept it by signing the same contract or a copy and you have not secured the house until you have that in your possession. If the other party's offer falls through, the vendor could still accept your offer and you would have a binding contract. If you don't want to proceed you will need to withdraw your offer as Linar indicated. Do it in writing, maybe via fax as well as delivery so you will have the fax receipt as proof.

Just think of the company as a 'person'.

Costs associated with investment would be deductible. If the rent is not enough to cover this, you will have a negative geared property and this should be able to offset other income the company has, if any.

If you wish to pay off a loan, you cannot claim the principle as a deduction as it is not an expense – you are just repaying what you borrowed. But you could pay off the principle before paying tax – but you should probably be careful not to leave a shortfall or the company may need to borrow to pay tax.

A company can rent a property to a shareholder or a director, but you should be careful to do it properly as directors are required to act in the best interest of the company etc etc And there may be many issues from a tax perspective too – such as FBT.

Hi Phil

I agree that it is a worry having your assets in a trust with a limited life.

Are you confident your trust will hold up in 80 years? I know there is a firm promoting these sorts of trusts which supposedly do not end, but I was speaking to a solicitor specialising in trusts and he said the law was unclear on this area and that it was a weak argument.

Hi HK

You should easily qualify for a loan here straight away.

Buying a unit for cash could be a good idea as you would have a PPOR which would be CGT free. Once you have this property, you could mortgage it and purchase more investment properties using the initial loan for deposits and costs and borrowing the rest.

Renting initially and investing can also work, but you would be paying off someone else's mortgage and you would not have a CGT free asset growing for you.

I personally wouldn't use one of those so called cashflow mortgage products. But I would use a LOC to pay for any shortfall which is essentially the same thing with less costs. Properly structured this would help you pay your PPOR loan off quicker and give you greater tax deductions and it would look less like a scheme to avoid tax in the eyes of the ATO.

As for living off equity, I would do it too, or maybe supplement other income by taking a bit from a LOC, but it would be a bit scary if you are doing that for a few years without property prices increasing – like in Sydney now. So you need to be careful there too.

Never, unfortunately!