Remember security for the loan doesn’t determine deductibility of interest. It is the use that counts.

Buying a property is not a taxable supply. Selling it may be.

Perhaps it is a breach of copyright or licence – you are paying for one off use.

It looks like a lease which is a legal document – a contract.

This is something to ask the person giving you credit advice. The bank will probably do nothing as you will have a 30 year loan term and probably have not committed any default.

Banks will need to stress test your ability to pay. They are probably using around 7 to 8% PI payments and basing your spending on standard indexes. Failure to do so would be a breach of the law – your brokers are probably breaking the law (NCCP) by suggesting a scheme to get around this.

Legal questions – a tax agent could answer question 2.

1. Obtaining a financial advantage by deception is a crime so banks would care if that is what you are doing.
2. Tax is based on what is done with the property and not what you have told to a bank.
3. Land tax is based on whether you reside in the property or not.

Consider buying a main residence borrowing 80% and then pay it Down asap while recycling debt by paying the loan off and redrawing to invest. Structure the loan splits to maximise flexibility in doing this.

How many years was it not the main residence? Sounds like 2 years so 2/12ths.

The period it wasn’t the main residence appears to be 1 year so 1/16

Hi Pete

No lender will lend more than the security for the loan, but it is still possible by borrowing secured on another property or unsecured such as a related party loan, eg. loan from parents.

This is covered in one of the tax rulings. I can’t recall the answer specifically but I think it may be possible as long as it doesn’t create a new asset.

Best to speak to council or a town planner first to see if possible generally and then to seek specific legal advice on whether it would be a breach of the sis act. A lawyer can give this…[Read more]

You can’t use the 6 year rule in this situation as you are not absent from the whole property.

The cost base of the main residence could be reset at market value when the GF is first income producing and you would then need to apportion based on area.

See SDA009 which is a ruling from Revenue SA.
Look at example 1
https://www.revenuesa.sa.gov.au/rulings/SDA009.pdf

My understanding is that such a transfer would result in double duty as essentially it is an onsale

Pete – did you sell them for more than purchase?

I see it unlikely that rates will jump more than 0.25% in any one rate rise so to jump to over 7 would mean a about 12 or more rates rises.

With units it can be easier to get the valuations up because if another sells in the same block the valuer has a direct comparable. But this wasn’t me but a client of mine.

I know of no way to sell an option on a property and not breach the mortgage agreement, unless you notify the mortgagee. Same with caveats being lodged.

That is capital because it is payment for the property. Any interest component?

I did one with ANZ – new valuation done at the day of settlement which come in $20k higher. But many lenders want the borrower to wait 3 to 6 months between valuations and/or increases.

Also note that giving an option on the property would probably be a breach of the mortgage agreement with the bank.