You would find cgt calculated at market value. Loans are irrelevant for cgt.

If only you had used a unit trust

This is basic tax law, s 8-1 ITAA 1997. Interest would be deductible to the extend that it relates to money borrowed to purchase income producing assets.

Your accountant is wrong.

There could be several methods to structure this. One I like is using a discretionary trust. Money can be gifted and borrowed back. Later this loan could be refinanced and 100% deductibility could be maintained if done correctly. In addition tax and asset protection advantages would be possible.

Also make sure you obtain the permission of your mortgagee if knocking down their security property.

Hi GOM,

Nope, if you buy under a discretionary trust it would be impossible to transfer to a related SMSF.

But if you were to set it up under a unit trust then it is possible to sell the units to a SMSF down the track. This can be done without stamp duty in some states. It can also be done without breaching the SIS Act or regulations.

I am a Sydney based solicitor (CBD). What sort of legal advice do you need?

It can be done but the hotel cannot he used a security.

Why would you want to go to them?

A trust is treated as a separate entity for tax purposes so if there is a loss within the trust this will not affect your personal income. But a trust can negative gear like a person can. i.e. a loss from investing in property within a trust can offset other income of the trust – or another trust which could distribute to the loss making trust.

a few of my clients have done this. Buy a house with a large block of land. Split the land so that they end up with one empty block and one smaller block with the original house. One guy got the original house valued at almost the same as his purchase price meaning he basically got the block of land for free. He will sell the new empty block and pay out the portion of the loan attributed to this land, then reborrow up to 80% and repeat.