Hello Contrarian

This would be a nice trick if it worked so can you please explain how to make it work.

To the best of my knowledge taking equity out of your IP to pay down your PPOR mortguage would not make the interest on that amount tax deductible. The ATO is interested in what you did with the money (used for private purposes not investment in this case) and not where it came from.

So what am I missing?
Elka

P.S. Almost didn’t recognise you Richard. [biggrin]
Have you changed your hare?

Hello ao

The info you posted seems dated. Here is a link to the relevant section of the Vic. SRO site. They administer the FHOG, the Vic bonus and stamp duty, which is a state tax.

http://www.sro.vic.gov.au/sro/srowebsite.nsf/taxes_benefits.htm

I haven’t looked to see what the rules are but like in every other state you will be required to live in the property within a certain period of time and for a certain period of time. You should be able to find it on the site.

Hope this helps[smiling]
Elka

Hello Richard

Although it was not intended as an invitation to wish you a happy birthday, I just thought that I would anyway. [biggrin]

Happy Birthday

Together with my good wishes I thought I would just give you a bit of advice.

Don’t go near your keyboard on the 2nd. Spend it much more usefully and enjoyably with your wife and kids.

Have fun [party][party][party]
Elka

Hello Morty

Can I ask you why you have decided to use a company structure to buy and sell property? I assume that you’re aware that there is no CGT discount for companies.

Of cause if your intention is to buy and sell properties as a business then the profits are seen as income and not CG so that may be OK but if it’s for investment then I always believed that a company was not the way to go.

For investment purposes a trust is what most people recommend for both asset protection and flexibility of income/CG distribution.

Not advise, just an opinion. [smiling]

Elka

Thanks for the tip Simon. My niece was looking at a home loan from them as, like you, she is attracted by the low rates. I will warn her.

Cheers [smiling]
Elka

Hello brc

I don’t know the answer to your question but I think there may also be CGT implications here.

I assume that they where thinking of doing the transfer/sale at the original price? but I am not sure if the ATO will wear that. Also something to check maybe.

Cheers
Elka

Hello picklesam

Since you lived in the property as your PPOR before turning it into an IP and have not declared any other place as your PPOR then you have up to 6 years CGT free on this property. In fact if, before the 6 years is up, you move in again and use it as your PPOR (no deductions for this period) then after a time you can turn it back into an IP and the 6 year rule starts again. i.e. no CGT.

I don’t know for how long you have to live in it again but it will probably be in the order of 6 – 12 months but you need to check that with your accountant when the time comes.

Nice rule eh? [biggrin]

Elka

Hello Sharon

I’m an Aussie living in Belgium. I have several investment properties in Australia and would be happy to answer any questions you have, if I am able.

Obviously I am a non resident for tax purposes as well though I have a TFN and my accountant lodges a return for me. There are no differences between being a resident or not as far as CGT on property is concerned and all deductions are the same. The big difference is that you start to pay tax from the first dollar at a rate of 29%. Not nice. After $25K it’s just the same as everyone else.

The big win re CG for a non resident would be in shares as the ATO does not charge CGT on this. The rest depends on your country of residency.

You might like to read this thread too as there might be one or two bits of useful information for you there. The person who started it was going to S’pore to work.

https://www.propertyinvesting.com/forum/topic/24430/1.html?sortfield=&sortorder=&SearchTerms=singapore

I’m not sure what else to tell you so just feel free to ask.

Hope this helps [smiling]
Elka

Hello Terry

Yes, it is confusing. Your last post sent me back to my calculations to see if I was making a mistake in logic . However, I think not?.

Using your words above

Mum will have $200K equity and $100K loan = 3/5th of $500K
CJ will have $100K equity and $100K loan = 2/5th of $500K

To make it 50/50 CJ needs to take over half the current loan to give:-

Mum will have $200K equity and $50K loan (just as she has now)
CJ will have $100K equity and $150K loan

CJ’s $100K equity is the gift in your example.

CJ I noticed from your first post on this thread that the mortgage has now been reduced to $100K instead of $112K as per your original question on the other thread. So the figures should be:-

$400K – $100K = $300K = $150K equity per parent

Your father will sell you his share for $100K in fact gifting you $50K

So the new figures look like this.
you get 1/2 the house worth $200K

And this is made up of :-

$100K new loan you need to take out to pay your father.
$ 50K you are responsible for half of the existing loan
$ 50K gift from your father.

or to put it in the same format as Terrys example

Mum will have $150K equity and $50K loan (just as she has now)
CJ will have $50K equity and $150K loan

Your $50K equity is the gift from your father.

I hope I didn’t give anyone a headache with all this. [biggrin]

Elka