Why wait? You could set up a split loan on your PPOR and use this as deposits and shortfall, for the new property. It would therefore cost you nothing out of pocket and you can still pay off the home loan as per normal. I see the only reason to wait if you think house prices in the area you want to buy to remain flat or drop further.

What if it were to burn down and the seller's policy was not in place – you could lose everything. You may be able to sue the seller, but if they had no assets, then not much point.

A person's main residence is exempt from CGT, with a few exemptions:
– If it was used for income producing purposes
– it is bigger than 2 hectares

There are various factors which can determine if your place is your main residence, including
– length of time lived there
– whether all your family lives there
– address of your mail, drivers licence, electoral roll etc
– connections of electiricty in your name etc.

There are also exemptions if you do not live in your main residence and rent it out – you may still be able to claim it as your main residence and it will be cgt exempt for up to 6 years after you move out. s 145-118 ITAA 1936.

There is no minimum period in which you have to live in a home before it can be considered your main residence (from the ATO "Guide to Capital Gains Tax 2007").

You can also have 2 houses which you can claim as your main residence at the same time – to allow for moving from one to the other etc – with a few conditions.

And remember, a place cannot be classed as your main residence until you live in it.

careful planning can save you a heap of CGT!

Hi Rich Mum

Remember, Future loans needn't be with the same bank.

Most charge fees for reviewing trust deeds – and then not even read the thing sometimes!. From memory, ANZ is one of the few that doesn't charge an extra fee for reviewing trust deeds.

Just remember that nearly all lenders will require independent legal advice if there is a guarantee involved, and this means a trip to the solicitor and a few more fees too.

Not really. The Buddy should ideally have no assets in his name. Being a direct is risky and giving personal guarantees can be risky if the project goes bad as they bank will come after his other assets, if he has any. However, someone has to guarantee the loan, or the lender will not give finance.

Good point Richard!

Good point Richard!

The ATO can say that you are carrying this on as a business and therefore ask you to pay CGT. depends on how you structure it.

Also, CGT can apply to your PPOR if it is over 5 acres or if you have used your house for income producing purposes.

A trust is where someone owns something on behalf of someone else. usually with property, you or a company you control will own the property for a large class of beneficiaries. Income can be distributed to any number of these beneficiaries and this can result in reduced tax. There are also asset protection advantages as the legal owner of the property doesn't really own it. The beneficiaries are the real owners.

A company is a separate entity which usually limits liabilities. It is like an artificial person. It can hold assets and do business. The advantage with companies is mainly the limited liabilitiy factor. ie it is is sued, the person behind it is usually safe.

Partnerships are when 2 or more individuals/trusts/companies or any combination aim to do some profit making venture. Sole trading partnerships should be avoided because of the risk factor – if one of the partners gets sued, the remaining one can be forced to pay up.

With property, there are only two worth considering I think. Individuals and trusts. Spouses can partner, but I think it is generally not a good idea to purchase a property in a company because of the tax rates.

I don't think it is possible to claim a trust owned property as your PPOR. And moving properties out of a trust will trigger stamp duty and CGT – usually. I think land tax is just another cost you cannot really avoid.