yes, section 118-145 ITAA 1997

This is generally true, but not always.

for example A and B own a property.

B uses money from a LOC which is taken out in the names of A and B.

B buys a new property in B's name only.

B can claim 100% of the interest on the money used from the LOC to fund this property (if investment).

or

A owns a property and takes a LOC out on this property.

A's husband B buys a new property and uses this LOC to fund it.

B can claim 100% of the interest on this borrowed money assuming new property is an investment.

Here A is essentially onlending the money to B who is using it to invest.

Yes, Strictly speaking I would say it isn't deductible. But as long as you can trace the funds and there is no mixing of borrowed funds with other funds then the ATO may allow it.

You really need to see a tax advisor and to go through it all as if you get this wrong it will cost you tens of thousands over the next 30 years.

Depending on your circumstances the property could be totally CGT free if sold within 6 years of it being rented.

Since ownership is changing you would have to take out new loans. You could treat the existing loans as a 'refinance' so the amount changes. If there were 2 names on title then you used the money for other investments then nothing changes in terms of deductibility. You can still claim all of the interest.

Wrong.

who used the money and what was the money used for?

This makes sense then. If your wife is not going to be claiming interest etc then you don't need to worry about deductibility.

But what you have said about stamp duty cannot be correct. I have had a look at the Duties Act QLD and cannot see any relevant exemption except when adding a spouse to title to the main residence, s 151

http://www.austlii.edu.au/au/legis/qld/consol_act/da200193/s151.html

What you need to do to fix this part of your problem is to sell your property to your wife. Your wife needs to buy it off you for full market value and to borrow to do so. Then later when it is an investment your wife will be able to claim all associated expenses and to negatively gear – which may not help that much if your wife is not working and doesn't have an income. There is also no income tax on incomes less than about $20,500 pa either so she would have to earn more than this to save tax.

Stamp duty won't be exempt I think because you are transferring from one name to the other name and are doing so at market rates. If it was to remain the main residence and you were adding her name (and keeping yours) then it would be possible – but possibly only if for no consideration.

CGT would probably be exempt but you would need to discharge the loan and to reapply again as Aussieguy correctly pointed out above.

So, I suggest you do some figures and see if all the costs and hassle will be worth doing this. Your wife may not qualify for a loan without a job, but you could go on the loan together or guarantee the loan – with no tax effects – to enable finance to be achieved.

You would have to rejig all your loans so as to maintain less than 80% LVR overall. But this can certainly be done. for example the new one you buy may end up with a lower LVR with the overall LVR being 80%.

Complex but doable.

Aussieguy – hope I don't offend you, but virtually everything you have written is not correct.

1. The bank doesn't own the house, the legal owner does and the bank just has a mortgage – huge difference.

2. taking out a new mortgage on this property won't help with the deductions at all. Purpose of borrowings is relevant.

3. not sure what you mean about time limits but this doesn't apply because of 2.

4. You are confusing the FHOG with the exemption for transfers between spouses. In NSW adding a spouse on title of the main residence can be stamp duty exempt even if the spouse has owned property before.

5. There is no minumum time you must live in the property after settlement.

6. The last part you are confusing yourself!

Def do not have personal trustees. There is a recent case, Shahail from memory, where husband and wife were trustees. Husband did a runner overseas taking all the super money. Wife only remaining trustee in Australia. She ended up coping a whopping fine for breach of trustee duties and the fund was non copying and taxed at 46.5%.

Also consider residency as Richard mentioned. Even though you may be citizens this is not the same for tax, especially if you decide to live overseas at some stage.

And how is the SMSF going to own the property in India. Can an australian company own land there? Or maybe a nominee company – will this be ok under the funds rules and Australian law? Shares in a trust or units in a company? Would this be permissable? You need specialist advice – which Richard may be able to assist with?