Nope. No minimum time listed in law. As long as the property becomes your main residence this section should apply – as long as the other requirements are met.

If your funds are in the offset account you can just withdraw then and the interest on the loan will increase. Providing this loan relates to the purchase of the property the extra interest would be deductible once that PPOR becomes available to rent.

s 118-145 ITAA 1997

True in certain instances.

If you rent the house out first it will always be subject to CGT – but the effect will be small if any.

Pete – good points but you have mixed a few things up. Gifts can be attacked even if they are made before death. This is especially the case with elderly. There are many ways to attack such a gift under the laws of equity. There is also the NSW law of notional estate orders under the Family Provision section of the Succession act. Any undermarket value transfer could be attacked if the transfer occured within 3 years of death. NSW law can apply to people living in other states if they have a connection to NSW.

A gift also doesn’t necesarily mean a life interest. These are 2 separate things. A person can give another person a right to reside in a property until their death (life interest), but they are not directly connected (to the gifting).

Nothing much is iron clad unless you sell the property and spend the money.

Phil wrote:

Hi Terry,

I’m just curious to know, how is the St George portfolio loan an unfavourable choice for investing in property from a taxation point of view? I’m guessing that as long as the equity is used to invest, the interest accrued can always be tax-deductible, even if the loan is secured against one’s own PPOR?

Phil

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The Portfolio loan is a great product, but it can be a disaster if used a certain way. Some advocate crossing several properties to get one big portilo and this can ruin retirement if a property is sold as the lender may use the funds from the sale to reduce overall debt with the bank. but the main issue is if you are using the LOC as a transaction account. Money going in and out and that could mean a large debt but none of it deductible. There is no possibility of an offset on the Portfolio (i think).

Best to avoid LOCS for the main loan and only use them to access equity.

You should seek legal advice as there are many issues

4. asset protection, estate planning, succession, bankruptcy, divorce, taxation
5. income tax from rent and/or capital gains tax
6. future creditors of yourself/your mum. other family members. spouses.

1. Trusts are legal relationships – see a lawyer. Only lawyers can set them up, especailly in WA – there is caselaw on this. If the property is in NSW think about trusts very carefully.

2. I have purchased many – but you are taking a gamble as you won’t see who is next door for example

3. Look on loan documents if there is more than 1 security then they are crossed. Best to uncross before going ahead.

4. Yes with spouses one can be on title and both on loans or both on title. But what by inn both names? It can hold you back. If he is self employed with no income having him on the loan is pointless from a servicing point of view and it just doubles the risk too.

5. Plan ownership structure and loan struction. Buying in one name could allow the 2nd person to be clean for the next one.

6 learn more.

There is no stamp duty or CGT on transfer to a beneficiary under a will or intestacy laws.

There are also many other advantages to passing via a will.

Heaps of issues. You should both see separate lawyers.

Gifts of real property attract stamp duty (unless via a will). If you will be renting it out there are tax issues. It might be better for you to buy off her at full market value, borrowing to do so, and she can gift you the cash.

Social security issues if she is on the pension. Deeming provisions means she will be assessed on any gift for 5 years – as if she still owned the item and was receiving income from it.

heaps of other legal issues – undue influence etc.

If the company is controlled by the members of the superfund then no the SMSF couldn’t acquire residential property owned by the fund – only business real property.