Andrew- What do you mean when you say you have cash in your home?
Does this mean you have paid more off the loan and can redraw.
Lenders usually let a LOC facility to 80% LVR -to work this out (current loan amount + LOC ) / Value of house = 0.80
A LOC is a loan
Where as an offset account is a savings account where the balance reduces the linked loans balance amount used for the interest calculated for the linked loan.
A LOC can be useful for borrowing money to use as a deposit for the next investment property loan/ purchase
It is a facility that can be sitting there ready for when you need a loan and then you withdraw money from it and it becomes a loan.
However you are also restricted for a LOC by how much you can service the loc from your income / wage .

An offset account reduces the interest on the investment loan this will reduce the amount of your negative gearing if you are negative gearing
This reduction can be useful long term on a private loan like a PPOR / Main residence loan as it can save you interest over twenty years.

I know i get my tax rate back on total costs, i pay at my tax rate on income – no it is the net loss not the total costs.
Depreciation is an expense incurred.
So net property income / loss = Total income – Total Costs – depreciation
I am assuming total costs do not include this depreciation amount.
So Net Property Loss = 12220 – 11223 – 2762
So 12220 – 11223 – 2762
= minus 1765
Now you pay tax on your wage as you earn it
So you have to look at the maximum marginal rate
http://www.ato.gov.au/individuals/content.asp?doc=/content/12333.htm
if you earn over 34001 tax is 30%
say you earned  35766 then you would have paid 30% tax on $1765 earned during the year over $34001
your tax return subtracts the net property loss from your assessable income bringing it down to 34001.
That works out to approximately a $529 tax return
(as you already paid this tax when you were earning this from a wage each week)

If your house was recently built and you do not mind increasing capital gains through reducing your cost base you can claim 2.5% of the building costs for the property. if it cost you $100,000 to build the house that is $2500 in depreciation a year for 40 years. if you are not already claim this as an expense

Well done Karen.

Another method is a loan product called a shared equity loan
see
http://www.refundhomeloans.com.au/shared-equity-loans.php
for an example and explanation of this type of loan
here are a few more to check out
http://www.loanmarket.com.au/home-loans/shared-equity/
http://www.public-housing.qld.gov.au/loans/home/loans/shared/index.htm
http://www.smh.com.au/news/national/equity-tradeoff-for-bigger-home-loans/2007/03/13/1173722471210.html
http://www.oceanbluefinance.com.au/index.php?option=com_content&task=view&id=28&Itemid=138

Please note !
The above web links are in no way a lender recommendation by me
but rather for your information so that you may be aware of this type of loan.

Australian Paper Pulp and Paper Manufacturing Mill at Maryvale, Monash University and the Central Gippsland Institute TAFE, the Australian Securities Commission's National Information Processing Centre are other industries in the area.

Anita
This is a grey area of tax law.
If you repair an item that back to its original state when you originally purchased a property it is a repair
If you repair an item in its entirety like say replace whole roof or replace whole carpet it is deemed an improvement
If you do work that improves the property beyond its original condition when you purchased it it is an imrpovement.
If you renovate and put in a living area below it is improving the property beyond its original condition when you purchased it.

Now something to consider
Iff you claim building depreciation on the renovation the depreciation is going to be subtracted off your cost base. So if you did 100,000 renovation as building costs and claim a portion each year the renovation cost base of $100,000 comes down each year.
So in the future it means more capital gains tax.
as CG = future value – cost base

Always factor in a higher interest rate when working out your figures. I have paid 10.5 % interest in mid 1990's so factor in a higher interest rate and if it happens to be lower you have some breathing space.

No –
 but go find a private town planner in Tassie and ring them up and find out what is involved as it varies from council to council

You can change the file type associations by right clicking on Start and selecting explore
Then click on tools
Click on file types tab
Scroll down to the file type and click on it
click on file extension used by video
and change it to play with media player.

Why do you want to sell ?

If it was me I would sell the land as it is not producing an income and is a drain on your cash flow. However it depends on your reason for selling. If it is to reduce debt and help you pay off the new PPOR loan then it might be good to sell it. As Capital gains tax will be lower. 50 % discount and 50% owner ship so 25% of capital gain is added to each wage assessable income.

If you are selling because of tax worries then it is probably the wrong reason. If your old PPOR becomes an investment property you can continue under the 6 year rule to nominate it as your PPOR for cgt exemption however the new PPOR is not exempt as you can only have one CGT exempt at a time.

Now the land – You can keep it and add all holding costs to the cost base under element 3 of the cost base for capital gain reduction . So when you sell it later or change it to investment you can add on holding costs to cost base. However once you claim holding costs these against rental income you cannot continue adding them to the cost base as you can't do both at the same time. Once a house is built on it if investment property you can depreciate as an expense on the building cost 2.5% p/a and depreciation for fittings and fixtures.

You can redraw to 80% LVR through a line of credit loan for future investment deposits.

Ask yourself is it better to pay 40% tax on profit or to lose $100 in expenses to claim back $40