Generally you shouldn't pay down an investment loan as you will be tying up your money and it won't be tax effective if you need the money for personal expenses. But you also want to release your mum from the shakles of being your guarantor – the only way to do this is to gain equity and there are 2 ways to do this – capital growth and/or reduction in loan.

If you were disciplined you could use a 100% offset account and save up the money in that. When you reach $69k you can consider whether to pay it off the loan or not. This will save the same interest, but keep things flexibile.

What about CGT?

Agents commissions would be around 2%
lawyers about $1500
discharge mortgage etc $500

But CGT could be bigger depending on your situation.

What state?

Hi Bob

Are you asking if the CG from the sale of 1 property could be streamed to, say, 2 people and that each of those people can get the 50% CGT discount.

I think the answer is yes. Any accountants out there?

Not so.

The trustee doesn't matter because the income flows through to the individual who pays the tax.

Also, try getting a loan for these. Much harder that normal residential. Therefore it will be harder to sell too.

i suggest you run some figures.

Also consider CGT as if you initially live in the property and later move out you may be able to retain the CGT exempt status of hte property

Unit trusts are generally good for two or more separate parties. Having the units owned by separate discretionary trusts should give each family separate control over their shares of the property.

So this is a good structure. You will have to watch out for land tax though. Using a trust may mean paying 1.6% land tax per year where you otherwise wouldn't.

Who is going to be trustee?

What happens if one of you die? Divorce? go bankrupt? Get pregnant? Go bald?

So many possibilities that could impact on what you will be doing – what if he wants to sell and you don't? What if he wants to sell his units (or unit) to someone you don't know? Does he need your permission? Is there stamp duty on the sale of units?

Might be better to have a larger number of units too. If you had 50 units each instead of 1 then it may be easier to bring in another partner by selling 25 units.

Who will be the appointor of your discretionary trusts?
Who is going to guarantee the loans?

The initial funds – will it be lent to the trust or gifted? Who will gift or lend? You or your discretioanry trust?

etc

The $1800 per month rent would be income which is taxable – less the deductions. There will be no loan associated with the purchase of this property so there would be little to deduct. maybe $1500 in income after deductions.

You will then have a $520,000 loan of which you will not be able to claim any interest because it is a personal expense.

Doesn't work out very well because you will be taxed on the $1800 per month (or $1500 after deductions) and then have nothing to claim on the new purchase.

You may want to consider selling the original house and then buying another as it would allow you to pay down a non deductible loan and then regear resulting in big tax savings.

depends on the circumstances – could possibly be exempt under s118.145 ITAA 1996