Your parents could borrow money secured against their own property and lend you the money. make sure you have legal loan agreements, so they will be able to claim the interest (actually passing it onto you). If they gift it to your they won’t.

They lend you the money and you borrow the rest. After the property grows in value, you can then increase your loan and payout your loan to them. This increase will then be claimable – the interest portion, i mean.

This way keeps everything separate, so if you go under, they do not lose their house.

Terryw
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Finance would be the major problem. As they say in the industry, this ones ‘hairy’. In fact it has at least two hairs, one being inner city, the otherone being size (yes size does matter). I imagine it would be well under 50 sqm in size.

If it is hard to finance, then it will be hard to sell. This will limit your capital growth.

Terryw
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Another way is to purchase a property in a unit trut with an individual or discretionary trust holding the units. The superfund could then aquire units in the unit trust. The trustee of the unit trust would then use the funds received from the unit trust to redeem the units. the menas the cash in the superfund is effectively replaced with units in hte unit trust.

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It is a very hard decision to make. I would work out all the possible scenarios, 1) move out and rent, 2) Sell PPOR and rent etc. Write each scenario on a different piece of paper, and see which is more cost effective, in the short term and the long term.

Things to watch out for:
-Your husband earns little, while you earn a lot. so oculd he stay home while you work a few more years?
-If you sell your PPOR, it will be CGT free, but this is your only tax free asset, if you rent you won’t have a home growing in value which will be tax free.
-if you are going to sell, condider moving into your rental property short term and then rent it out, so that you can establish it as your PPOR for tax purposes.

And don’t rush into anything.

Terryw
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You can do various things to reduce your CGT by reducing your income for that year. eg. prepaying some interest on investment properties, those 100% capital guarranteed share funds etc.

Terryw
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I have heard various reports on how much you need in your superfund to make it worthwhile. Some say as little as $50,000 would make it worthwhile. Do a web search, as there are hundereds of companies out there offering to setup and run your SMSF. Many have free seminars which you can go to to learn more.

Terryw
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Giddy Up!

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Hi

I can’t concentrate hard enough through your examples!!

But my understanding is this:

If you move out of your PPOR and rent it out the interest on the loan balance as is, would be claimable. If you increase the loan to use as deposit for a new PPOR then this portion wouldn’t be.

If you intially started with a IO loan and a 100% offset account, you could pay any extra into the offset, so when you move out the deposit for your new PPOR could come from your offset. This in effect will make your interest payments on your new IP (former PPOR) all claimable. It is like increasing your loan and having the whole thing claimable. But actually you are not increasing your loan as the money is coming form a separate savings account, ie your offset. Therefore the ATO can not argue you are increasing a loan for non investment purposes.

And I beleive you could claim depreciation on a rental property that was formerly your PPOR.

Terryw
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BTW, I think it is very risky too!

Terryw
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And try not to get too many eggs in the one basket.

Terryw
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