It could be CGT exempt for your daughter – but the rest of the owners will be liable for CGT – if there was a gain.

Taking money from redraw is new borrowings. The purpose of the original loan was purely to acquire the property (assuming you have made no increases and never redrawn). If you redraw the purpose of that new loan is to pay interest. If the interest on interest is deductible then it all relates to the same purpose – the property. But if the interest on interest is not deductible you will have 2 purposes. One deductible and one not.

It will become extremely messy to work out the portions if you do more than 1 redraw.

If you redraw and buy some personal items it would be even worse.

SB – have you had tax advice on number 2?

This would involve borrowing to pay interest. Interest would be deductible under s8-1 normally, but considering the ATO’s ruling on this they may apply Part IVA to deny the deduction.

Also from a loan point of view there would be few lenders that would allow a loan to capitalise like this without it triggering a default.

Asset protection is legal advice. See a lawyer. Accountants dont know about various aspects such as the bankruptcy act conveyancing act and other legislation as well as the laws of equity.

You can have good asset protection and be able to claim negative gearing benefits. But it will all depwnd on your situation and what you are trying to protect yourself from.

Actually I am not sure. I think the NCCP may apply to any natural person borrower.

No lender will lend baeed on rental income only where the NCCP applies as it would be a breach of the act.

brizziegirl wrote:

I’m sorry to enter this conversation in a way that may demonstrate my ignorance and may be a silly question, however I interpreted your first post as saying changing all his loans to P&I to increase lending. How does a move to P&I improve lending? If you could explain that, it would be most appreciated because it’s somethings I’m not aware of :-) Thanks

Yes it can improve serviceability – you would think the opposite though.

These days most lenders assess payments for other financial institution loans as PI and ignore any IO period.

So having a new IO loan for $100,000, 5 years IO and 25 years PI, for example, will result in the lender assessing the loan as 25 years PI.

However if the loan was PI from the start it would be assessed at 30 years PI.

Longer loan term means lower repayments which means better servicing.

Probably non-disclosure. leave off a kid, a loan etc and serviceability booms. Bank staff do it as well as brokers – fraud

A valuation would be needed if it was your main residence and then become income producing. This would occur when renting out a room, a granny flat, operating a business there or just renting te property out.

The cost base would then be the value at the time it was first income producing. All the aquisition costs and interest etc until that point are then ‘lost’ or not claimable against the CGT.

Scott No Mates wrote:

Nil provided that this was your only ppor and that you rented or didn’t own & claim your other place as your ppor.

Coudn’t claim the main residence exemption until after moving in.