probably difficult and costly to borrow that high and the extra will not bedeductible

rhi pg
t is good to have different views on things.
still recomend trusts over companies for investing . i would even advise against using a trust for reasons outlined above. but it is up to the client which way they go and a company could work out better for some limited circumstances.

Amsaimi I think you may be conflating two separate issues.

The first is borrowing to pay general expenses. This should be ok

The second is borrowing to pay interest. This is capitalising interest and is also generally ok. But the Ato has said it is not ok if you are doing it as a scheme to pay offf your non deductible loans sooner.

I am a solicitor based in Sydney CBD and have purchased a few properties of my own over the years, and sold.

None of my law clients have ever asked me if I am an investor or not. I don't know if it really matters too much, especially in regards to adding clauses to a contract.

I am overseas in japan at the moment so amd not available for any conveyancing work but will be back in a few weeks.

I assume that the granny flat is on the same title as the house? If so both tenants will need to buy the wholre property jointly. Or maybe you are approaching each separately about buying the whole place??

1. A contract for the sale of land.
2. They would have already entered into an agreement to buy and exchanged contracts. If they did not follow through and settle then they may lose what they have put in. But this could be challenged in a court as it may be inequitable.
3. Maybe
4. The biggest thing that can go wrong is that they stop paying you and you have to 'evict'.
5. Maybe work out some figures and then go to see them.
6. yes
7. Possibly means they are on a low income which may mean you need to assess whether they can afford to buy the property.

Also you must think about how much you are potentially losing. What if the property increases in value. You won't benefit but the tenants will so you are essentially giving up future capital gains to save some minor expenses now.

You also have to look at if you need a credit licence to be able to offer credit.

Might also want to consider a lease option.

Taking money out of a redraw is considered new borrowings. So I agree with amie.

Only the interest on the $15k would be deductible.

Yes, tax is much different

Children can only earn a few hundred from passive income before they get hit with penalty tax.
Children can get access to adult rates if they are physically working however.

No, I was assuming the children were not working. But they could be employed by the business company.

I was referring to them being beneficiaries of the trust that owned the property. (a company should not own property because of tax reasons).

Incidently if both you and your wife owned a house each and used them as the main residence then only one would get the CGT exemption.

You have to look at the terms of your contract.

Generally they cannot pull out. But if you have breached some terms then they may have a way out.

Check with your tax advisor.

But, as long as your are payng the interest each month then you should be able to keep borrowing to pay investment expenses. Put all rents and incomes in the offset on your home loan and only start to pay down the investment loans after you have no more non deductible expenses.