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thanks guys for your reply.
rolf: what would it entail?
back to my original Scenario
My IP is worth: $300K with an original loan of $150K, I maximise my loan and draw equity of $150K.
The IP was my original PPOR and now its currently being rented out. I am just wondering as i have only borrowed $150K and the rest of the money is technically my money right? and i would assume as the IP is for investment purpose that I can claim all $300K now?? or am i thinking too much???
if I were to "invest" or loan the $150K into a company that was a trustee to a trust to purchase the property, would that be deductible then?
Not really correct.
If you loan $100 to the trust you would be charged $7 interest pa. To be able to claim this $7 as a deduction would have have to charge the trust at least $7 in interest. Otherwise there is no commercial point and it would be a scheme to save tax. So $7 in expenses and $7 in income = no point.
What you could do is to borrow to buy units in a unit trust. If the trust is set up so that you as the unit holders get all the income and capital gains then you could probably claim 100% of the interest on the money borrowed to buy these units.
If you were to do this the trustee and the unit holders could not be exactly the same. It would be best to have a company as trustee for a number of reasons, but this will complicate things as well.
There are also a whole heap of other issues you need to consider.
Yes, many pros and many cons.
Cons:
- you would end up paying tax on rent you pay your trust (as rents rise).
- extra fees
- ATO issues if renting from your own trust.