There could be benefits.

The trust would be able to borrow 100% to buy from you and deduct the interest. This could release cash to you to pay down your PPOR loan and also you won't have the rental income which would have otherwise paid tax on . This will now be in the trust and be offset by the interest. Do the sums and see how long it would take to make the stamp duty back

Dom,

there are many potential ways to structure something like this.
1. Use other proeprty as securty
2. Use other property to set up a LOC
3. Gift and borrow back strategy with a trust
4. Spouse lending you money
5. cash deposit

With 3 and 4 you could effectively increase tax deductions while diverting income to the spouse. 3 can offer significant asset protection advantages too.

1. If you don’t have any other property that is your main residence then you should consider doing this.
2. Yes. Non cash deductions such as depreciation of fixtures and fittings.
3. Will they be paying market rent? If so then generally no tax issues, if not then you cannot claim deductions in full.
4. This will depend on about 10 different things you should consider besides tax.

Might as well ask them for a discount while you are at it. I’d go for IO as long as possible – prob 5 years.

I generally favour not paying down a loan, even if you don't have any non deductible debt. (unless you are tempted to spend and then you probably should).

Building up cash in the offset will have the same interest saving effect, but it will allow you the option of using this money later if you ever do buy a PPOR or upgrade a PPOR or wish to buy other non deductible items.

Sounds like your so called advisor may be nothing more than a sales person??? take care

Hi.

Yes, I am not yet licenced to give financial advice yet (planning to be eventually), but can give legal and credit advice. Richard, I am looking at PIS who you recommended way back for my AFSL.

For Aosv, you should really look at possibly getting your spouse restructured for business into a trust structure of some sort. Another trust can then be set up for the purchase of property and it there is a loss then the business trust could distribute to the property trust to offset the loss and overall to save tax. Negative gearing in a trust.

Watch out for land tax issues.

Its not wrong to pay down loans – it is good, but it could be more effective if you don't and restructure things slightly. If done properly it shouldn't cost any more in interest but can result in more tax savings.This

week I met a client and within 5 mins I had saved him about $5000 pa in tax by rejigging things with potentially much more savings down the track.

Claire, both you are your partner can only claim one CGT exemption between you (if you mean spouses, defacto included).

If as above then probably best to just keep IO with all cash going into 1 offset account. Take the cash with you when changing residences – make a new offset on the one you are living in.

You may also want to consider your different taxable incomes. Maybe better to keep the cash in the offset account on the house which is owned by the lowest income earner.

Hi Claire,

How long will the cheap accomodation last?
Have you ever lived in one of these properties? Thinking main residence CGT exemption.
Will you or is it likely that any of these would ever be lived in?
Generally get a LOC on the one with the most equity. You can go to 90%, but as all of your debt is deductible this may not be so much of an issue.

I generally am not in faviour of prepaying as:
1. You need to fix for 1 year
2. You are really only bring forward deductions so could have a biigger problem next year if not much to claim.

But it will depend on your interest rate and outlook, the numbers and the situation.