It is interesting the ATO has not withdraw another similar ID issued close of the other one:

ATO ID 2006/297
Income Tax
Deductibility of compound interest» on a split loan facility
http://law.ato.gov.au/atolaw/view.htm?rank=find&criteria=AND~interest~basic~exact&target=JA&style=html&sdocid=AID/AID2006297/00001&recStart=881&PiT=99991231235958&recnum=892&tot=901&pn=ALL:::JA

But that is probably because they will not allow it! :
“Decision
Yes. The taxpayer is entitled to a deduction under section 8-1 of the ITAA 1997 for compound «interest» incurred on funds borrowed, under a split loan facility, to acquire an income producing asset. The Commissioner, however, will exercise his discretion under Part IVA of the Income Tax Assessment Act 1936 (ITAA 1936) to disallow the deduction otherwise allowable. “

ATO ID 2006/298 (Withdrawn)
Income Tax
Deductibility of compound interest» on a line of credit facility
http://law.ato.gov.au/atolaw/view.htm?rank=find&criteria=AND~interest~basic~exact&target=JA&style=html&sdocid=AID/AID2006298/00001&recStart=881&PiT=99991231235958&recnum=893&tot=901&pn=ALL:::JA

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

And don’t forget, tax can be minimised even further by using trust structures.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

Hi Breakeven

Most people don’t realise that there are various restrictions out there, especially with LMI companies and Lo/No doc loans.

eg. You go for a 95% loan, then 6 months later try to a No Doc loan with a different lender. Both Lenders could use the same LMI company, and your loan for the No Doc could be rejected as a result. Planning can avoid this.

eg. 2 You could be purchasing a few properties with your spouse, and suddenly hit the maximum exposure level for the bank or LMI company. Planning can avoid this.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

There are some funny brokers out there.

Its not just about getting the best product, but about planning so you can get many more loans down the track.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

Trajik

Thats a great idea. Munchwood, you may also move over there and find out you don’t like it too. At least give it some time to see if you settle in before purchasing.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

I beleive that would work, ie you can negative gear against your personal income and distribute the capital gain to any beneficiary including a company, but remember the companies do not get the 50% discount on CGT.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

Mathew

Why transfer to the LOC at all? I have a 100% offset account which i keep spare cash in. If you pay down the LOC, you cannot claim the interest on the portion of withdrawals if it is not used for investment purposes.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

Hi Mat

Maybe you are thinking of a big LOC type loan. But this is probably not the best way to go. It can get messy, like you are experiencing now.

I think it is far better to keep each loan/property separate as it is easier to
– increase the loan (only need to value one security)
– leave the bank (no need to apply to uncross the loans)
– know exactly what the values are (it may be just one big pool otherwise)
etc

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

Get some professional advice. You need to worry about things like asset protection – what happens if you buy jointly and your mate goes bankrupt? You could end up owning a property with his creditors. Or worse, he gets divorced.

And borrowing capacity, it you have a joint loan, you will be assessed on the full amount for your next purchase.

Then what would happen if he decides he wants to sell? You may have to self the whole thing at a time inconvenient to yourself, or try to buy him out.

For starters have a look at http://www.lawcentral.com.au they have an agreement there for people who wish to buy property jointly..

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.