lexd

Don’t see how delaying things would change anything.

I suggest you seek tax advice as you could probably pay off that loan, using the offset money, and start again. but before you repay the loan you must split it so you can repay the relevant portion. Splitting it can unmix it.

Its like unscrambling an omelette.

it depends on the situation actually. You might be able to pay off the loan and then reborrow. But if you increased and existing loan you would need to split it first.

Seek tax advice.

Dinh, did you increase the investment loan and place any of this money into the offset?

If so you have contaminated your borrowed money, and you have also contaminated the investment loan.

See my other post which I just wrote where I warned about this.
https://www.propertyinvesting.com/topic/5025544-need-advise-cash-in-equity-through-loan/

Unless your mortgage broker is also a tax agent or a lawyer, they are not qualified to give tax advice.
s 8-1 ITAA97 will allow interest to be deductible where funds are borrowed to use to investment property acquistition. If you borrow and place that money into an offset account, there is no connection to the investing.

If you later use that money you could argue that there is a connection and therefore that the interest should be deductible. But where you have borrowed in May16 and use the funds in say Feb17 there is a long gap between borrowing and investing. Can you still claim the interest – maybe, but you should apply for a private ruling to find out.

Also where the borrowed money is parked in the offset account and you already have money in the account, or you place other money in it later on then you will definitely have problems because the borrowed money is mixed with non borrowed. When you subsequently use the offset money to invest you cannot say you are using solely borrowed money, so at best only a portion of the interest will be deductible.

My advice, as a tax lawyer and a broker, is to
1. Use a IO loan where you can borrow to pay back into the loan and then later redraw when needed.

If you cannot, then

2. Use a LOC. Once this is drawn down convert this to a IO loan.

If you cannot, do either, change banks

3. Use a IO loan with an offset. Borrow money and park in the offset and then repay the loan before reborrowing and using. This way the borrowing should occur when you need the money for investing.
Not ideal, but a work around solution.

4. Least recommended is the borrowing and parking in a 100% offset account. But never put any other money in this account – ever.
If you want to do this I suggest a private ruling be applied for.

not a good idea to borrow cash and put it in an offset account as you could lose the deductibility of interest.

best to set up a LOC or an IO loan that you can draw down when needed.

The no vesting date – any trust set up in SA doesn’t have to have a vesting date. In theory it could go on past 80 years, but just because there is no vesting date doesn’t mean it won’t vest. A beneficiary can force it to. But would SA law apply to a trust set up in QLD which nominates SA as the applicable law? Would the trustee need to be located in NSW, would the trust assets need to be located in SA. All these questions cannot be answered because these laws are less than 80 years old.

Most discretionary trusts would have the ability to distribute to lower income earning beneficiaries.

Asset protection will depend on the terms of the trust and how the trust transacts. A person using it as an extension of themselves would weaken asset protection considerably.

New beneficiaries can be added, but stamp duty and CGT issues arise. Broad wording can mean people that don’t yet exist are potential beneficiaries – grand children etc.

If you die any assets you hold as trustee do not pass via your will. Your position as beneficiary doesn’t pass via your will, any appointor postion could pass via you will, but probably shouldn’t. The trust will survive you and keep going under different control. YOu have to make sure that this control falls into the right hands.

The type of trust recommended will depend on your situation and what you are trying to achieve.

I charge $1500 plus GST to set up a trust, including 2 hours of legal advice and customising the deed.

A trust must lodge a separate tax return so there would be extra fees for this at tax time.

There are no good books on this topic – best is probably the Trust Structuring Guide which is very costly, but it is not so comprehensive – doesn’t discuss land tax at all from memory.

Yes, you could put down an offer which involves a long cooling off period, subject to finance, subject to building inspection etc. This way you can pull out and get your full deposit back if you cannot meet the condition.

Another option is to use an option agreement, but this is for more longer periods.

Yes many ways to set this could potentially.

First, try a different lender
Secondly, ask the bank what you could borrow without the wife. See how much the short fall is
thirdly, is it possible for your wife to borrow on her own and lend you and the other person the money.
4th – it is possible for you to borrow some on other property and lend your mate the short fall?

No it doesn’t if by ‘partner’ you mean spouse. If not a spouse then you would not find a lender I think.
Not all banks allow this either BTW – AMP recently insisted that they would only lend to my clients if they purchased at least 90/10 together but not if just 1 was on title. All the majors should be fine.

If maximising her pension is the goal it would depend on how much cash she comes out with. If a small amount it won’t make a difference. If a larger amount it might be worth her while buying a main residence.