They can’t. But a company they may control could pay them. Why do you want to pay yourself a wage? This is taxable in your hands. If you have a company that owns property and it pays you all the rent it will be the same, income wise, if you owned the property.

CGT and stamp duty on the transfer. new loans.

And trusts cannot retain income without paying top tax rate.

Are you running a business? separate entity?

If not you cannot pay yourself a wage.

cs_rlewis wrote:

Thanks, even the fees charged by my bank from paying out the loan are capital costs?

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NEver heard of a bank charging for phone calls or faxes.
If they are fees charged by a lender then they possibly could be borrowing costs and claimable over 5 years.
Best to seek specific tax advice.

Sorry, you have sold your property. So these appear to possibly be fees in relation to the discharge of a mortgage and loan.

• This reply was modified 9 years, 4 months ago by  Terryw.

not deductible against income. capital costs

You’ve had advice from everyone except the lawyer. A SMSF can only borrow to acquire a single acquirable asset and the asset must be held on trust while there is a mortgage.

But you are talking about a unit trust being involved. Under reg 13.22C a SMSF can own units in a unit trust under certain condition, one being that there is no mortgage or encumbrance on the unit trust itself.

But if it is a widely held unit trust then it is possible for the unit trust to borrow – if it can find a lender. Your SMSF or associates can have no more than 50% (or 49%) of the units of the trust.

It is likely that the lender knew about the SIS Act, but didn’t know about the borrowing having a SMSF involvement.

Yep Jamie is right. Simply drawing down a loan doesn’t make the interest deductible. Deductibility depends on what the funds are used for.

If it wasn’t you one could buy 50% off the other and borrow to do so and claim the interest once rented out – it could be done with no stamp duty. But it may still be worth doing now – one buy the 50% share of the other so they become the sole owner, you just have to pay stamp duty. At least this allows you to increase deductions and keep the property.

Sorry to hear about your situation. This sort of thing is fairly common unfortunately.

If you had a $100k loan, non deductible, secured by the home you could set up a separate loan of $20k also secured by the loan.

You would then borrow $20k from the above loan and $80k from a new loan secured on the IP = 100% borrowings with no crossing of securities. Interest on both loans will be deductible against the IP income (assuming set up correctly).

You should never use $20k cash as you will end up paying more no deductible interest.