11 Strategies for when you move out of the PPOR and keep it

There are several things that can be done to improve the tax situation of moving out of the main residence and into a new main residence while keeping the old main residence and renting it out. Often there will be large amounts of equity in the original property while the new property…[Read more]

No work arounds I’m afraid other than transferring title. I will post below an article I have written on this topic

I thought he was borrowing to buy a house to live in?

If he borrows for another investment property the interest could be deductible.

No the interest wouldn’t because the use of the funds is for private purposes. security for the loan doesn’t matter.

Sorry I read it the other way.

If can still and should be structured like I wrote but the interest on neither loan would be deductible.
The amount of deductible debt won’t change and would be limited to the interest on the $120k loan (at most).

borrow against your existing house at the same bank for the deposit and costs. Make sure this is done via a separate loan.

Then borrow 80% secured on the new property, ideally at a separate bank.

Result = 105% loan without cross collateralising securities giving maximum asset protection and deductibility of interest.

There are 2 aspects to consider
a) making the property your PPOR for land tax – which requires you to live in it for 6 months prior to the assessment date -30 Jun I think, so you would need to move in by 30 Dec and live there continuously

b) The absentee person test, probably won’t apply if you are living in the property for 6 months as that will…[Read more]

Well your early retirement has probably been derailed now

You need to look at the definition of ‘absentee’ in the land tax act and try to make sure you don’t meet this as your land tax bill will go through the roof.

Absentees are taxed like trusts. the threshold drops from $600,000 to $350,000, the rate is higher plus there is a surcharge on top…[Read more]

what states are the properties in? Hopefully not QLD!

Probably poor wording but ‘you’ cant purchase property with your super, the trustee of your SMSF can though.

But I agree with Richard – why would you want to cause the trustee to do that? Unleveraged property has a low return, could the money be used elsewhere more effectively?

Generally, travel costs are not deductible for property
any legal costs could be a capital cost but as there is no capital gains tax event I don’t see how you could claim these either.

Generally there is no different treatment between tenants in common and joint tenants for stamp duty. JT are considered to be the same as TIC in equal shares.

I don’t think there would be any difference with first home duty concessions either.

In an ideal world you would hold each property under a separate trust, but you have to consider administration and fees. However in QLD it can work out cheaper due to the land tax savings.

Not sure what you mean by a piggy bank trust, but I sometimes recommend clients gift to the trustee of one trust and have the trustee of the second trust…[Read more]

Under NSW law if a person controls a trust, company etc, the assets of those entities could be ‘attacked’ by the courts having the powers to deem teh assets to be part of the estate of the deceased – under certain limited circumstances.

So if you know or think someone may attack your estate after you death you have to plan carefully, even if you…[Read more]

Better in what sense?
Are you trying to avoid assets falling into the wrong hands at death due family disputes or gain asset protection on potential bankruptcy of beneficiaries.

There are many ways that funds funnelled thru different entities can be attacked. There are claw back provisions in state legislation and in the bankruptcy act. e.g you…[Read more]

A will is hardly bullet proof, not sure what you mean by ‘wishes attached’ but a letter of wishes has no legal weight. It all depends on the circumstances. If you don’t own property, it can’t be passed via your will – example spouse owned property but that can be attacked.

The corporate veil? In some instances the corporate veil could be attached…[Read more]

Not any more buddy!

This stamp duty ‘loophole’ closed last year.

The commission has nothing to do with the crossing, but if you refinance he would get a bigger commission because of the bigger loan.

You signed a contract to pay him, not sure what the ombudsman could do. Why not just instruct him what you want and tell him to do it – no crossing. You are the client and borrower. And don’t go signing anymore contracts!

As a broker and lawyer I would suggest you avoid setting up your loan in such a manner. Commissions don’t change if loans bundled together but there are brokers out there that just use one particular bank and/or product so most of their clients go into the same bank and product. Saves them having to think too much.

Cross coll can be useful in…[Read more]

Hi Louie

If you are developing then a whole different structure might be the way to go. You will be able to improve asset protection by segregating risk and assets if you do it properly.