Agreed. The deductibility of an outgoing is wholly dependent on the purpose for which the outgoing was incurred.  Therefore, the interest incurred on interest that is attributable to a loan originally taken out for an income producing purpose is generally tax-deductible.  Dan42 is right though – if the sole or dominant purpose of letting the f…[Read more]

Terryw wrote:

eddiec wrote:

Terryw wrote:
If may be difficult to borrow the money in your own name unless you use your own property as security. It is difficult to borrow in your name if the company is the owner as this will be 3rd party lending.But, assuming you can, and you charge your trust more than you are paying, then you will be…[Read more]

Terryw wrote:
If may be difficult to borrow the money in your own name unless you use your own property as security. It is difficult to borrow in your name if the company is the owner as this will be 3rd party lending.But, assuming you can, and you charge your trust more than you are paying, then you will be making a profit and diverting money…[Read more]

Terryw wrote:
hi CRJI think I recall hearing something about that now – will look into itFor the 50% bonus the asset needs to be over $1,000 for small businesses and to be classed as a small business the turn over needs to be less than $2mil.

That "double dipping" thing was a thing of the past, Terry.  It was sanctioned by TD93/145 for years…[Read more]

navyboy wrote:
hello all,just wanting to clarify a pointif you purchase a PPOR and happen to subdivide it, the sale of the new block has CGT with it. Yes?But what if you live in the house, subdivide, sell the house you live in ( CGT exempt) whilst building on the new block. which will become your PPOR once complete. will this help someone avoid…[Read more]

Terryw wrote:
if the renos were done to improve the house that you are going to be making rental income out of, then the interest should be deductible.

I agree with Terry – the interest on the loan in relation to the renovations will become tax-deductible when the property becomes available for rent.  Should also see if you could claim the…[Read more]

Be mindful though that transferring the assets from the existing company to a new trust may give rise to income tax (eg, CGT) and stamp duty.  To manage the income tax and/or stamp duty, consider setting up a holding company a unit trust and form a tax consolidated group.  Once consolidated, any intra-group transactions (eg, transfer of assets) w…[Read more]

jsawtell wrote:
Hi,Apologies if this has been posted previously.  Did a quick search.Question,I have an investment property which we are breaking the Fixed interest.  Are the Break cost tax deductable as an expense or capitalised until sale?ThanksJason

Hi JasonI believe the "breaking cost" is usually characterised as "penalty interest".  It is…[Read more]

Terryw wrote:
Why wouldn't it? Most trust deeds allow a trust to pay an income to a trustee for managing the affairs of the trust. Most trusts are also allowed to run a business and pay wages as well. They are usually very flexible.But why pay a wage? Why not just pay a distribution instead. If you pay a wage then you need to worry about…[Read more]

perpetrator wrote:
Hello All,Can anyone recommend a reliable property law expert that can advise on a JV agreement between a land owner and a property developer please? Prefer Brisbane based, however, will travel to the Gold Coast if required.

Please send through an email if you are still [email protected]

Agreed – provided that the trust deed does not prohibit the [email protected]

No, you don't have to move back in.  The law says as long as it was your main residence before you moved out, you have up to 6 years to continue treating it as your main residence even though you are renting the property out, provided that you don't own another main residence [email protected]

There is a strategy I am aware of that protects the equity of a property in an individual's name.  However, you will still need to use a trust on the side.  The property will be treated for income tax purposes as if it is owned by the individual, not the trust.  If you go travelling, the potential tax implications will depend on whether you ha…[Read more]

duckster wrote:
Apparently it depends on when prior to 1 July 2008 deductible expenses on an overseas property can only be deducted against foreign rental income or other foreign modified passive income such as royalties and dividends.After 1 July 2008http://www.ato.gov.au/individuals/content.asp?doc=/Content/00107951.htm&page=5&H5It can be…[Read more]

Don't recommend artificially inflating the rent – the Commissioner can apply the general anti-avoidance provisions in Part IVA to unravel the arrangement.  On top of that, they can hit you with penalties up to almost double the tax shortfall.  Definitely worth it in my view.  For future planning, you need to ask yourself: Am I doing this with th…[Read more]

Yes, the arrangement is legal but there are two key issues:1. As Terry pointed out, the trust must have enough income to utilise the negative gearing loss.  Otherwise, any resulting tax loss will be trapped in the trust.2. The future sale of the property will not be sheltered by the main residence exemption for CGT purposes.  If an individual o…[Read more]

Sounds fine from a tax perspective because no cash actually moves in and out of the actual investment loans, which means that any interest incurred on the loans will remain tax-deductible, albeit the interest incurred may be reduced when there is money in the offset account.  This is so regardless of whether the spare money gets put into you or…[Read more]

It will be dictated by the contractual terms of the sale.  Unless you carry on a property business or you are doing this as a one-off profit-making undertaking, any profit on sale will likely be taxed under CGT.  If so, the date of the contract is when the sale is deemed to have occurred.  Because of this, it may be worthwhile to use an option to…[Read more]

freelance2020 wrote:
Hi Everyone,I've heard about this method a few years back called a 1031 Exchange in America. The following is a brief outline:Overview: Real estate owners or investors expecting to acquire property subsequent to the sale of existing property can indefinitely defer income taxes by utilizing a 1031 exchange. In a typical…[Read more]

If it is just business structuring, a tax savvy accountant would do.  If there are specific legal issues that will need to be dealt with, the accountant will refer you to a lawyer anyway.However, if there are contracts involved, eg, shareholders agreement, contract with third parties, it is best to get a lawyer to review these documents in any…[Read more]