tedstar1 wrote:

How would you set-up the loan for your 1st IP to avoid cross cat?

We owe nothing on our PPOR and were going to use the equity in it for a deposit and have the other 1/2 put in an offset account.

Split loan – one for deposit against PPOR
– One for the IP loan

With an offset account sitting in the middle helping reduce Interest repayments on both loans

Thoughts?

Never borrow to put in an offset account. This is very dangerous as it could ruin the deductibility of interest.

Use a LOC on the PPOR, borrow only to invest.
Set up an IO loan on the investment property and attach a offset account to this. All wages and rents into here.

Take the 23% from the LOC and borrow 80% on the IP = 103%

Basically
1. via loans
2. via ownership

One party can lend to the other and/or the parties can jointly own the property, either directly of indirectly.

Here is a case, from 2014, where the member caused the fund to lend to a relative who them lent the money back to the member – who later went bankrupt!

Deputy Commissioner of Taxation v Lyons [2014] FCA 1353.

An SMSF trustee has been fined $32,500 for lending money to a related party, in a recent Federal Court case,
http://www.solepurposetest.com/news/smsf-trustee-fined-32500-loan-relative/

Yes, one of my tenants died.

But the lease does not stop immediately at death. Notice must still be given and the estate is still liable up to this point.
See the actual law on this
s108 RTA (NSW)
http://www.austlii.edu.au/au/legis/nsw/consol_act/rta2010207/s108.html

You cannot dispose of someone else’s assets. The family will usually come to collect these. You need to be careful about giving access to family too as you don’t want to give access to the wrong person who then removes property without authority.

Depends on the terms of the contract.

Bill Atlee wrote:

Partners are included in the individual SMSF’s.

does it not make sense to pay rent on your own investment opposed to someone else’s tho?
I see it more benificial to live in you investment. Win win

Thoughts?

partners are not included in an individual SMSF but a spouse is a related party and a member or a related party cannot benefit from the member’s super until that member meets a condition of release.

It makes perfect sense because the sole purpose of super is to assist in a member’s retirement.

Yes its similar, but the AFSL is much harder to obtain and there is much more compliance and regulation. It costs much more than broking as well.

Thats right the trails are paid to the licence holder who passes it on to the authorised rep.. Might be difficult.

J12345 wrote:

Advice from accountant:

“If you have got a partition agreement for the title split, there is no CGT implication on the completion of the subdivision to 2 separate properties. The CGT only applies when you happen to sell the new property.”

Phew.

Wow, that is a bold comment without seeing the documents. I don’t think it is that simple and I was going to refer you to the same document as crj above.

Change of title could result in stamp duty, CGT/Income tax and GST – even if there is no ‘sale’. But the deed of partition may save you against all of these. Did you get legal advice on the GST and GST aspects as well as the stamp duty?