Rather risky I think. What if you forget to exercise the option on time – if your exercise is ineffective or defective. Plenty of cases where this has happened.

I am sure Jamie would like to talk to you, but if you are going to go ahead with someone else then don't waste his time.

If it is one title then you would need to apportion your loans accordingly. ie. you can't artificially have all the debt on the investment portion and none of the other portion.

Check with your accountant about deductibility of interest.

And banks split loans all the time so you shouldn't have a trouble from this end.

You could split the loan on purchase. But you couldn't attribute more than a fair split to the investment portion.

Why a LOC on the property? This could be dangerous.

I agree with Shape – doesn't really work in practice. Personal loan will be short term, high rates and PI. It will hurt serviceability. It will also be hard to find a lender – not impossible though.

getting a quick and higher revaluation is also not easy.

Slow down there!

There are a few issues here.

Firstly you could sell your half to your wife – but many complicated and costly issues.

But things might not be that bad.

At the moment you have created a mixed loan – most probably non deductible as it related to the purchase of the house which is owner occupied. This interest may be deductible once you move out and rent it.

The other part was money borrowed for the new IP so this portion should be deductible.

But the problem is you are probably paying PI and it is a mixed loan so that would make it hard to apportion.

I would advise you to immediately convert the loan to IO and maybe even consider splitting into 2 – the redrawn portion used for the investment and the rest. Have the offset account set up on the non deductible portion and problem almost solved.

Then when you move out asses whether you would be better off selling it to your wife.

It is, but what was the company formed for?

And why would you want to buy in the company?

Many issues.

First determine what effect this will have on their pensions.

Then if you were to buy part of the house, what about accessing equity down the track – all owners must go on loans. If it is a rental then no PPOR CGT exemption for you and what was once fully exempt becomes partlially exempt.

Stamp duty on the transfer.

Estate planning issues.

Asset protection issues – if you default parents won't have a place to live maybe.

Perhaps getting them to assist you into a property may be less messy. parental guarantee or even a loan may work out better.

As far as I know there are no land tax exemptions In VIC for land owned by a company – even when the sole shareholders are living in the property.

If the company was acting as trustee then this is different – depending on the trust.

Thanks Richard.

Yes you could have an option to purchase part of a property. There are many ways to structure the option and strike price. could be based on an average of 3 valuations, cPI increases or some round figure. cost to prepare an option agreement would be around $2,000 to $3,000 plus disbursements and GST.