Offsetting a loss against a capital gain – query

Yep. Their contract states they can be liable for all rates, strata levies etc plus two types of interest daily (don't remember know what they were but it totalled approx $500 per day) PLUS the sale shortfall!!

Approx 1 year ago, before the unit eventually sold, they got a letter from the receiver and had to send details of all their assets etc. They have heard nothing since and are hoping it has gone away. Me – I would rather know than stick my head in the sand.

We have been trying to tell them that, but they still prefer to employ the ostrich theory. This conflict of opinions from the accountants has just raised the issue again. Mind you, they are just now doing their 2011 tax returns so that may give you an idea of how importantly they view their wealth creation, They have a few other properties and complain about negative cashflow etc but don't follow up on our advice about tax variations etc.

They are good friends and normally I would applaud people taking action to get ahead, but they have merely bought properties over the last few years off the back of successes we have had, without any of the due diligence, consideration of their personal circumstances, strategies etc that we employ to greatly increase our chances of success. And unfortunately they are not very teachable – breaks our heart.

Unfortunately yes, without seeking legal advice first . There's not much equity available so they would fall far short of the final amount, but I guess anything is better than nothing for the Administrator if they have creditors to pay.

So, they employed an investing strategy that carries a greater element of risk than some, without fully understanding the legal ramifications (let alone the market they were buying into), did not ensure they had a plan B in case of problems, and may lose everything. Theirs would then become the BBQ story that scares off other potential investors.