Shuffling I think.

Banks are keen to balance their numbers so many are just changing exising investment loans over to O/O without any proof. Borrowers are wanting to get lower rates so are keen to say what the banks want to hear. This then makes banks look better in the eyes of apra

1. possible, but maybe unlikely
2. a put and call option would lock both parties in. Developers want an out if case they cannot do what they want to construction wise
3. safe in what sense? You will have no control, but will get to keep the option fee if it doesn’t proceed to a sale
4. yes, if your intention is to lock in the developer

Cartman, I think you are conflating 2 separate issues.

If A lends to B the itnerest is deductible to B if B uses the funds for investment purposes.
B would pay interest to A
B could claim the interest as a deduction
A would declare the interest received as income.

Where A is on a lower rate rate there are tax savings overall.

But don’t try this without legal and tax advice.

No. It is just borrowed money.

If you pay the loan down to nil and redraw and invest you should be able to claim all the interest provided there are no detours.

If the loan is not paid down to nil then it will be a mixed purpose loan and you will have to apportion./

simang wrote:

Hi Terry,
We are looking for someone who is able to tell us the best way, for our personal situation at the time, to purchase each property for maximum benefit. I know there are pros & cons for purchasing property in your own name, as well as purchasing through a trust – I’m just not sure which way to use when.
As it would all have tax implications, I’ve assumed we would need an accountant to help us understand which vehicle is better when. Happy to hear any feedback if I’ve got it wrong, or there is a better way to go?
Thanks,
Angela.

What about a lawyer. Lawyers can advise on the tax aspects as well as the legal aspects of structuring – how to own property and how to structure loans.

Examples include trusts, companies and SMSFs in addition to joint tenants, tenants in common etc.

A simple example is a non working spouse lending money to the working spouse to buy a negatively geared property. This can divert income to the non working spouse who will pay little to no tax and divert expenses to the working spouse who will maximise their deductions.

Make sure you have your loan structure right, especially with retirement coming up.

You could also keep things as is and just build on your dad’s land. You might be $100k short now, but you could possibly borrow from your dad or do a bit of owner building.

If your dad dies first you could then inherit the land. If you die first you dad gets a house. You could have an legal agreement drawn up – common in granny flat type situations where a parent sells and uses proceeds to build on adult child’s land but this is in reverse and on a bigger scale.

What about the land tax in NSW!!

Meddedf

You should get some tax advice before proceeding. By borrowing and parking money in an offset account you could destroy the deductibility of interest on the loan.

An make sure you do split the main loan with the increase, otherwise you will end up with a mixed purpose loan and you will be throwing good money away.