Thanks for your advice. We realised this a bit too late but I guess better to find out now than to think that we are able to claim the interest as tax deduction for a whole financial and then have a whole lot of other complications.

We have decided to transfer the property back to myself 90% and my husband 10% and reduce the loan to the minimum that we require and pay it off as quickly as possible We will be positive gearing but I guess it would be better than in the situation I mention above.

Can anyone recommend a good tax accountant in Melbourne?