La Trobe would be better probably – but she just needs to weigh up the fees and rate.

If you have $500k in super then it would make more sense to set up SMSF – generally. This is because when you look at all the fees in the industry fund they will add up. It may cost less than $2000 pa to run your superfund. But you will have much more control and many more strategies at your disposal. Imagine you were to die now, it would be the trustee of the industry fund that decides where your super can go. At least with a SMSF you can plan ahead.

Just don’t invest in property directly through a sales person.

Its a bit ridiculous to pay a $5k spotters fee when the broker will get a commission as well. Maybe she should approach Pepper via a broker that doesn’t charge.

DeanCollins wrote:

Hi Terry

The St George portfolio loan is only being used for property purchases and each property is being handled by a sub account.

It does have the issue of all the loans being cross collateralized but as I’ve discussed before, I don’t have an issue with this in our personal situation.

Thanks for your advice though, always appreciated.

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Terrible situation. Not sure why you would want to set it up like this (destiny?). Not only is there the cross coll issue but the tax issue – hope you are not going to make any deposits?

DeanCollins wrote:

@terry, so the St George portfolio loan doesn’t attract stamp duty on mortgages for IP?

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Its not the product it is the use. If the loan is being used to purchase property now then there is no duty. If the loan is being used to set up for some future property then there will be duty payable – but banks assess this and collect the duty and sometimes they miss it. If you are charged duty for a LOC you can later fill in a form and ask for a refund, one you use the LOC on property.

BTW you should not be buying a property using the St G portfolio loan. This and other LOCS should only be used to access equity. If you use it for transactions you could end up with a large loan with none of the interest deductible.

Mortgage duty only applies to individuals borrowing for non property purchases (e.g. a LOC) and company loans. It would be on the date of the loan acceptance.

An individual buying property won’t be charged duty on the loan they take out to buy this property.

TFE wrote:

It was a full gift, no need to repay it

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Thats a pity as it would rule out some strategies.

You probably can redraw to buy a car but you shouldn’t as it will create a mixed purpose loan. As Corey says split the loan if you need to borrow to buy a depreciatiing asset such as a car.

The interest on the car loan may or may not be deductible depending on if it is business related.

ijc wrote:

Thnx all for your contributions. Terryw could you please elaborate on:”Cost base is $300,000 plus all costs not claimed such as stamp duty, lawyer fees, estate agent commission etc.” I would like to know exactly what costs I can claim in the cost base so I can do a calculation. Are any of the selling costs like REAgent’s fees included?

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Easier to look directly at the relevant law:
http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s110.25.html

This lists out the things you can claim.

hi Richard – Steele held her land for about 10 years from memory, and never developed it, but intended to and had undertaken activities such as applying for DAs, getting plans done etc. I think the only income she received was from agisting horses on it.

There are more cases, another one where someone claimed expenses on an off the plan property which they intended to be an investment – but they changed their minds and moved in, yet were still able to claim the expenses.

Where someone is building an investment property which they intend to rent out I don’t think there is any issue with claiming expenses before it is rented out. It is not too soon or too preliminary if they can demonstrate intention to rent it out.