Jason Staggers wrote:

It’s hard to outsmart the big banks. Even on the interest free period, they make their money on the average person’s lack of self-discipline.

And carelessness. I forgot to pay my cc last month being about a week over and I copped a $67 fee.

That link goes to a link concerning data matching. I don’t think that is the ‘why’ but it is a tool.

I think the reason why they are chasing is because of tax fraud. many people have pretented to be living in a property when they were not, or vice verson pretending it was rented out while living in it. Also there are more than a few foreign owners who sold a property and simply went offshore with their money without paying CGT – and there are new withholding taxes to prevent this happening too.

Its a good thing!

Richard, wasn’t there an exemption added for offset accounts about 5 years ago?

Actually there are no licencing issues with this sort of thing if you can keep a narrow focus. Property advice is unregulated. You will need a licence to sell or rent or act as a buyers agent, but not do do similar to what Steve McKnight does. Structure advice is legal advice so you could not advise on what names on titles or the tax implications. You couldn’t advise on loans without a credit licence. An AFSL or financial planning licence is only needed if giving advice on financial products – shares or super or insurance basically.

Chattaway wrote:

Put another way I have been figuring from what i’ve read (obviously wrong!) that you’d work it out like this
Interest paid $16000 but tax deductible and therefore 31.5% of $16000 is $5040 – I therefore recieve back $5040Property management $1200 but tax deductible and therefore 31.5% of $1200 is $378
Where is my logic failing me :(

What about the rental income you are earning?

You add up all the costs and then deduct this from the rent. If there is a loss this means you are negatively geared. If positive you are postively geared.

Logan wrote:

Thanks Terry I’m learning a lot from you.
Just to clarify on no.3.Do I determine the commercial rate as it is a personal loan ? Because it would be a different rate to what is being charged on the LOC.I’m assuming that I wouldn’t need the paperwork & also charge myself the commercial rate if it was purchased under personal name?

You have to consider what the security would be for the loan. If the trustee is going to offer you a 1st mortgage then no reason why you would not offer similar rates to a bank. If it is an unsecured loan then a commercial rate may be a higher rate. But you would not want it too high as you are diverting income from the trust to yourself. You should get both legal and tax advice.

If you were using the LOC yourself then there is no lending from yourself to yourself but you have already borrowed from a bank and can then use these funds to invest. If you do it properly the interest should be deductible.

1. Yes, if you borrowed to buy.
2. no
3. yes. You would have to lend the trustee the money. loan would need to be at a commercial rate if you want to claim the interest.
4. not enough info, but can be a good way to proceed. But there may be better methods.