Don't assume finance will be ok as it depends on more than equity. At least approach a broker beforehand. You wouldn't want to waste all your time and energy and costs of checks only to find out there is no chance.

Then get a copy of the contract. See if there is anythin unusual in it. You could start some verbal negotiations and then see a solicitor before making a formal offer. Get your friend to check it out and then use a building inspector too.

No. The property just has to be your main residence and then you move out. The rule relates to being absent from your main residence.

I still don't see how it differs. Remember this scenario is based on an offset account attached to an investment property.

Say the IP has a taxable loss of $5,200.

If he has $50k in the offset then this will save $3,200 pa in interest. So the tax situation for this property will become $2,000 loss

This effectively means his income overall has increased by $3,200. This in turn means tax will increase by his marginal rate x $3,200.

If he had put the $3,200 in the savings account at the same interest rate his loss on the IP would be the same, but his overal income would be increased by $3,200. So he will end up paying $3,200 x marginal tax rate in extra tax.

Its just a commercial decision. Bank would probably sell at market value and make a claim for any shortfall on LMI. LMI will lose out as they couldn't pursue the vendor or previous owner as he is bankrupt. This is what they charge their huge fees for.

Would you rather earn $100 in interest or save $100 in interests on the home loan?

Both would result in the same savings – assuming the same entity is involved.

The $100 interest would be taxable. The $100 in interest saved would mean  you have $100 less in deductions which means your taxable income will increase by $100.

A trust is not a legal entity. So the names on contracts should be that of the trustee. But the ATO treats a trust as an entity for tax purposes so it could be X as trustee for Y.

For insurance it doesn't really matter I think, but you should inform the company that the trustee is acting as trustee – full disclosure. Not sure it would make any dfference though.

AALLII wrote:

Can someone please explain the difference between having a company setup to be the trustee of a trust as opposed to having myself as the trustee of a trust which will be used for purpose of subdivision and land development. Thanks

Allii

Huge difference.

Companies have the benefit of limited liability so will help protect you and your assets if something goes wrong. Althoug you will still be required to give perosnal guarantees for loans etc.

Using a company clearly distinguishes the trust assets from your own personal assets.

It is easier to hand over control with a company to someone else. eg. you become incapacitated and the trustee needs to be changed – if a company you just change directorships with title being the same with an individual you will have to change the title of the land.

This is also easier for estate planning at death too. Make sure you plan control of the trust being passed on as trust assets are outside your will.

A vendor would unlikely accept such a condition other than for a few days. Otherwise they could be locked in with you still trying to sell.

I imagine that would be a capital expense and could be deductible against any capital gain/loss

Thanks for this more concrete informaiton.

Do you have any caselaw to back this up?

My take is that 'variable' doesn't mean the contract contains an uncertain term. Variable could possibly mean 'uncertain' in some instances but could also refer to 'change' or 'adjustible'.

For a contract to be void for uncertainty I think you would need more than this. The language would have to be vague or imprecise.  You couldn't have an agreement to buy a house but subject to a price to be agreed upon.

One term of the contract could be imprecise but the contract as a whole could still stand. It is also possible that a term could be vague but stiff able to be defined by common practice or some other method. eg you could have an agreement to purchase a house with the price to be determined by the average of two valuations by registered vauers.

With the loan agreements the interest rate is listed in the agreement, but it is subject to change.

That website you listed is a bit of a conspircary right wing type. The letters are appauling.