Very unlikely you would be the sole beneficiary of a trust – unless it is a bear trust.

Ideally you would want to borrow to repair or improve an investment property – unless you have no non-deductible debt perhaps.

Richard’s idea is good. Perhaps you could use a related party loan to pay the tradesman and then refinance this with the bank once complete.

He should seek specific tax advice.

There is no minimum period legiislated to make a property the main residence. It is not 6 months. Receiving a deposit will not generally be a separate tax issue. It is generally the date of entering the contracts (but not always).

It will depend on the circumstances. Just using the property is not enough. It must become the residence.

Its simple really

Lets say you have a $100,000 investment loan at 4% pa and $20,000. Depositing the $20,000 in the offset account will save you $1,600 in interest per year. This means you have $1,600 in extra income and will pay tax on this.

Now if you put $20,000 in a term deposit at 4% you would have $1,600 per year in extra income and would pay tax on this.

Therefore you would only consider a term deposit over an offset account if:
a) the rate on the TD is greater than the rate on the loan, or
b) there is a spouse on a lower income who could invest in the term deposit and pay a lower rate.

When the courts make orders to rearrange ownership of property they do take into account who owns the property and who has paid for it. But they also take into account non-financial contributions.

So some investment structuring strategies could work against you in a family law dispute. One strategy is for spouses to keep finances separate and to buy property in single names. Where X buys a property and Y makes no contribution to the deposit or to the loan, or to the repayments and has never helped in renovating the property etc then the courts are more likely to favour X in such a situation.

There are exemptions for CGT on the transfer of property as a result in a relationship breakdown. If title is transferred CGT may not be triggered now, but the recipient (transferee) will be liable on the full amount when the property is later sold. So as Blackhotel says you have to take into account the future CGT liability on any property settlement.

And, trusts can help in some situations, it all comes down to how they are structured. I think one recent case is Morris v Morris where the spouse attacked a trust of which the husband was a beneficiary, but failed to have the trust assets treated as property of the marriage. it was still a financial resource though.

limumeng wrote:

Hi Terry,
I thought if I hold the PPOR for 12 months, I am not subjected to CGT.Am I wrong ?
Thanks

This statement could be true, but it is not always correct.

A main residence could be exempt from CGT provided certain requirements are met such as:
– not income producing and not able to claim the interest
– moved in as soon as practical after completion
– not claiming another main residence
etc

there is no 12 months rule. You are probably confusing the 50% CGT discount which applies after 12 months.

Mido wrote:

I sign th epre sale 2BR apartment in level 20 with good view, I think I’ve got good deal with price and time frame bcuz I can rent it easy with condition and location and clain it on tax

But will you be able to get finance to settle in 2019?

No, it is probably not a good idea to sell a main residence to pay down investment loans. You will be giving up your only tax free investment and you will be paying tax on the increased income. Plus you will need to find somewhere to live and if you are paying renting you will have to pay that with post tax income.

It will be based on title unless one party makes application for the courts to make a property settlement.

I advise against 99% 1% ownership in most cases. Owning one percent of a property is pretty pointless. Consider the effects on borrowing too.