Doesn't make sense, logic is missing!

you are proposing to borrow money and investing it into a savings account = interest not deductible.

You will be mixing borrowed money with non borrowed money = even more not deductible!A

And you will be using the funds in the offset to buy a private residence = prima facie interest not deductible.

further more the original loan would end up a mixed purpose loan and cause all sorts of other difficutlies in calculating and apportioning interest.

You can see why you need tax advice

I would prefer the use of the offset account rather than paying down the loan.

Things can change. So you may decide not to move into your Brisbane house again and buy somewhere else to live in. If you had paid it off this will cost you a fortune in extra tax. Why not consider a IO loan with a 100% offset? This will allow you to save the same interest but keep a large loan just in case. In 4 years you could have $440,000 in the offset and $440,000 owing still but no interest being paid. At this stage if you decide to move in you can pay off the loan/keep it as is incase you move out.

If you want to use the $85k whatever you do don't take it out of redraw as this will create all sorts of problems and you will end up paying more tax. Set up a separate LOC on this property and borrow this $85k. This will then be segregated and you can claim the interest separately from the main house loan.

Of course there would be restrictions.  THe land would be worth much more than $1 and this is being done to help the town economically.

Probably such as:

1. Must build on it within x months

2. must be owner occupied.

The definitive answer is found in s 8-1 ITAA 1997.

(1)  You can deduct from your assessable income any loss or outgoing to the extent that:

                     (a)  it is incurred in gaining or producing your assessable income;

……

You surely mean "I wish now I hadn't gone through that broker.

Just because most are clueless doesn't mean all are. (from what I see at training sessions etc most are clueless)

You can create new trusts but this won't help with servicing if the same people are giving guarantees.

There are no books on this sort of thing. For structuring in general see The Trust Structure Guide 2012.

Yes you certainly can have 2 trustees and both can provide personal guarantees.

But think forward – do you intend to buy more property inside and outside the trust? This may actually hurt serviceability depending on your situation.

Short answer is that trust assets do not form part of your estate and cannot be passed via will.

Say you own a property as trustee for a trust. You cannot pass this on in your will. You will need to consider who will take over the trust once your die. The trust will continue and a new trustee must be appointed. How this is done is usually stipulated in the trust deed. Usually it is the appointor that decides the new trustee. If you are also appointor then this doesn't help, so you must have a back up appointor in the trust.

If you don't have a back up appointor it could be your legal personal representative who decideds. This would be your executor if you have a will. So careful consideration is needed as to who this will be. If for whatever reason you don't have a will then someone close to you can apply to the courts to become executor. They could even appoint a private trustee company – such as the Public Trustee.

So you need to consider succession of your trust carefully or others may take control. And I have seen this happen.

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A will can contain provision for a trust too. eg. you can leave your house to Michael, or you could leave it to Peter as trustee for Michael. You can even have a full discretionary trust or a unit trust in your will. This is called  a testamentary trust.

There are huge advantages to having a testamenary trust such as:

1. asset protection if  a child later becomes bankrupt or goes through a family court dispute.

2. Tax streaming

3. Tax effective distribution to children – at adult rates meaning $20,000 pa per child tax free.

So there are huge advantages to leaving property to loved ones via a trust structure.

Possibly this wouldn't have changed anything.