Terry,
From what I understand the exemption applies for rural properties to allow farmers to pass farms onto their children. It applies to their children only, and not transactions between siblings or other relatives. I just had a quick look on the ATO site and couldn't find it but I know it's there somewhere. Our solicitor gave us some paperwork on it and it outlines the ATO section number so when you have that it is easy to find. It is a liilte ambiguous though so I had our solicitor do the research. I'll dig it up and let you know.

Jack, thanks so much, I'll PM you!

Thanks Jack and Terry,

I've spoken to our accountant about using a trust for the farm (he does this with his) We would have to pay stamp duty if we bought through a trust but if we buy in individual names we can receive a stamp duty exemption because it's a rural property being passed on from ancestors. This will save around $65000 so it was hard to pass it up. 

We have pre-approval for a residential loan and they're using the full 1.5 mill for the valuation (some banks used only the 750k). We're okay with serviceability for the farm, I'm more concerned about investing afterwards, maybe I should worry about it down the track. Being a residential loan, I was hoping they might use the residential criteria regarding using the LVR, although I guess we can't have it both ways if we're asking them to consider the tax advantages of the farm as income for our next IP purchase???)

The farm will be primary production but as a hobby and we hope to turn over around 20k in cattle. This will be an income of around $10000 but it will always run in the red, especially when repayments are taken into consideration.

Jack, I think I'll have to track down one of those "extremely knowledgeable and experienced brokers on this forum" you speak so highly of because they obviously know the game inside out. 

Thanks again.