a Borrower cannot just increase their loan and get the deductions. The money needs to be purchased to acquire an income producing asset – such as buying his wife's share. But VIC is one, if not the only state that allows spouses to transfer between themselves without stamp duty – whether for investment or main residence.

In NSW this would only work if there was no consideration and if the wife or husband was being added to title of the main residence.

BTW, I think this is a major reason to invest in property in VIC. Imagine transferring the property back and forth several times over the years as the value increases with this allowing you to pay down the debt on the main residence (but watch out for Part IVA).

What state is the house in and do you have  a spouse?

If it is in VIC your spouse can buy it off you for full market value and stamp duty can be avoided. She/he can borrow to do so and this will release cash funds to be paid for the new home and allow the spouse to claim all interest when the property is rented out.

Where did you get this quote from?

It is grossly incorrect!!

You can only deduct the interest on the amount of the loan associated with the money borrowed to purchase that loan.

On the face of it the $300,000 loan may be the portion relating to the original loan associated with the purchase. But you mention using redraw, so if your loan balance ever dropped below this amount then it would be more complex depending on how you conducted the loan. At the very most it would be the minimum loan amount that the loan achieved. But it could be even less if you were putting money into and pull out of the loan again.

Yes. Third party from the beneficiaries point of view because they are using someone else's equity

This could be done by the trustee borrowing and I lending money or the beneficiary borrowing and using the trust property to secure the loan.

Yes, if the deed permits.

Dave

You have repaid $60k. Taking it out will be new borrowings and deductibility will depend on what it is borrowed for.

2 loans is not much bargaining power, but you should be able to get a much better rate than this.

Consider asset protection now before doing anything. Which names on title, how it is funded, ways to protect your cash deposit etc.

You shouldn't be holding large amounts of cash in your personal name. Too dangerous and tax disadvantages.

Consider gifting to a discretionary trust and borrowing back to purchase property.

If you were working overseas and earning in that currency that you are borrowing in then it is possible. eg. NAB Japan used to lend up to 70% for aussies working in Japan at around 2% secured by Australian property. many conditions though.

I don’t know if you would have a strong case based on those emails.

Even if you win you won’t get much back in terms of legal fees. There are caps on what you can claim. If you lose then you pay your own costs and part of his legal expenses.

Best to see a lawyer, but be skeptical of what they tell you.