Offets, Subdividing and DFTs

I have just bought my PPOR with my fiancé with a 80% mortgage through a NAB offset account. The title is in both of our names. 

My fiancé has an investment property which is financed through a Westpac offset account – from which we drew down the 20% deposit for our PPOR. However the title of the investment property is in my fiancé and her father’s names.  Am I correct in saying that the 20% we drew down is not deductible as it was used for the purchase of our PPOR? Are there any other issues I need to be aware of in this situation? We are thinking of leaving the title of the IP as is (her name and father’s name) as she is on a lower MTR.  

We are in the midst of subdividing the IP and plan to build a townhouse on the subdivided block. Our family members have offered to pay for the construction (as its too much for us at this stage) using the equity in their existing PPOR. They will simply let the rental income pay off the mortgage amount (positively geared) and then gift it to us once it is completed.  My question is – whose name should the title of the subdivided block be in? Additionally, when the townhouse is paid off and gifted to us, should we utilise a DFT as we plan on keeping it perpetually and we’re not too fussed about the CGT discount reduction for trusts?

Any other suggestions or advice greatly appreciated

Thanks