Hi, The original post seems to say that the land on which the 2nd property has been constructed has been held since 1994 and there is overlap with the original main residence which has been held since 1992.The legislation is very clear that the main residence exemption can only be applied to one property at a time and that there is only a small…[Read more]

Hi Dellas,You might want to have a look at the NAB residential property survey.  They seem to be saying that demand for inner city low rise apartments and townhouses is s…[Read more]

Hi,There is no time limit for living in a property to be able to claim the main residence exemption.  You just need to be able to demonstrate that it was your main residence.  There will be an issue for claiming the full main residence exemption on the 2nd property as you can only have 1 at a time.  When you sell it you will need to do an ap…[Read more]

The ATO are currently attacking scenarios where people are seeking to claim deductions for money borrowed to pay interest on investment loans.Need to be careful on this…[Read more]

Let's get back to fundamentals.  To determine the deductibility of interest we must look at the use to which the loaned funds were put.In the case of a re-draw, this is technically a new borrowing.  This borrowing is not put towards the acquisition of an asset that will produce assessable income.  Ie using it to pay the monthly repayment is not th…[Read more]

Thanks Steve,The concept of a reasonably arguable position still exists.  It comes up when the treatment of an item is in dispute.  If a taxpayer can demonstrate a reasonably arguable position they will not be penalised if the ATO finds against them.  Notwithstanding, they will still have additional tax to pay and interest thereon.Lack of ade…[Read more]

No way!  A good compliance history may help you plead your case but it will not stop them going through you like a dose of the salts.The consequences of having poor records can be catastrophic.  Maintaining your records is a dull but essential job.

Hi,Please get tax advice.  My intial thoughts are that you would have a Capital Gains Tax issue here as a result of both the change in ownership proportions and the change from joint tenants to tenants in common.  Stamp duty issues may be able to be dealt with under an exemption for transfers between spouses.  I would strongly recommend that you…[Read more]

Hi,Theoretically the vendor of a property is required to provide a statement containing the information necessary for you to work out your capital works deductions.  There is no requirement re depreciable items.It doesn't hurt to ask them for a report as suggested above.  If they are not forthcoming then best get your own QS depreciation re…[Read more]

Hi,From a tax perspective depreciation and capital works deductions are based on cost.  A QS report is simply a means of determining what cost is when a property is acquired and details are not available for depreciable items and capital works.As such, it would not be possible to re-assess the cost of existing items with a new QS report.  F…[Read more]

Hi,Am I correct in understanding that this property is pre exisiting – ie you did not build it?  If this is the case then I note the following.Depreciation and capital works deductions are based on the cost of the items.  Depreciable assets are based on the price that you have paid for them.  Capital works are based on the original construction co…[Read more]

This style of arrangement seems to be modeled on the split loan facilities that were the subject of Hart's case back in 2004.  In this context, it's not surprising that the ATO have taken this view.The focus of the draft ruling is really the use of a line of credit to effectively capitalise interest.  It seems that if you take this out of the equa…[Read more]

Hi,Refer to http://www.sro.vic.gov.au/sro/SROnav.nsf/childdocs/-98E8944DC5A0C753CA2575D100047764-696A6B5AE91CEBBDCA2575D10004A84D-0A7301F952940470CA2575D1002B2D16/$file/publication-D2-05.pdfIf there is no additional consideration then should not be double duty.It's quite common to purchase with a and/or nominee clause and then complete the…[Read more]

Hi Namz,I can recommend SRJ http://www.ascenta.com.au/default.asp?PageID=86Ashley