A discretionary trust is one which allows the trustee discretion to distribute income and capital gains to a wide class of beneficiaries.

A hybrid is, usually, a discretionary trust which has the ability to issue units. Usually the high income earner borrows to buy the units and claims the interest on this loan against their personal income. In return for this (to justify the deduction) all the trust income must go to the unit holder. Later on the unit holder can sell their units to the trust and it can then function as a discretionary trust.

The ATO is looking into hybrids now, and there are certain deeds out there that are no good and will not allow the interest claims to be substanitated. So I would suggest you not buy a Hybrid trust deed over the internet without some professional advice.

Renovations are certainly deductible. But when and how is the question, and this depends if it is a repair, a part of the building works or an improvement etc.

try http://www.guardianpartners.com.au

Hi Marc

So you are borrowing money to buy your wife's half of the property which will be an investment. On the face of it, it sounds to be ok. But the ATO could apply part IVA and say you did it with the dominant purpose of avoiding tax and thereby disallow it. Whether they would do this or not I don't know.

To make it stronger froma tax POV, what about if your acquire your new share in a trust, so you have 50% as an individual and 50% as a trust = but this then may invalidate the stamp duty concessions.

Hi

The ATO wants to assess you on  your worldwide income, so you probably can claim the loss against your Aussie income – but you will have to pay tax on the profits here too.

For NZ properties, you actually can get loans here in Australia. There are not many lenders that do it, but one is Pioneer. I think the rates are lower here slightly, but then you have to factor in exchange rates etc.

Hi Wayne

There was that recent case in NSW where an agent sold a house where one son of hte family killed his parents and a sister (gozales family). The house was sold to a Taiwanese couple who where from out of town and not familiar with it. They were also superstitious. They eventually found out and sued the agent. Think the received a large payout too.

I think it was ruled the agent has a duty to declare this sort of information even if the topic isn't brought up.

But how long should this be disclosed? What if the next purchasers sell the house 5 years later etc.

One potential problem is if the MIL has a loan over the property. She would need a cash payment to pay that out. If this is the case she could vendor finance it to you on an installment contract instead though.

One of my PMs talked me into dropping the rent recently to get a tenant in quick. I was then shocked to see she has signed them up for a 1 year lease – I had assumed it was 6 months. I checked the contract I had signed with the agent, and in the standard provisions it includes a provision that the agent has the ability to sign the lease on behalve of the owner.

If you wish to challenge a valuation, you will need to show recent sales history for similar properties in the area. Try and get a little list together and present this to the lender who should pass it on to the valuer.

However, if you have the loan approved already, then there is not much to worry about. Valuations are only valid for 3 months, so unless you are planning to buy again soon, just leave it till next time. And then prepare a list in advance so the lender can present it to the valuer before they go out.

The guaranteed tenancy is what makes it unattactive!! Lenders realise there is no real guarantee and fear that the guarantee has been built into the price. though there are less problems with this with an existing building.

You would probably only get 70 to 80% LVR for a serviced apartment.

If you doubt capital gains would be good and rental returns aren't too good either, why buy it?