PPOR Rules, CGT implications, interest deductibility

We will be approaching our accountant but in the meantime, I would welcome any comments on two questions from the clever folks at Somersoft.com....

We have our PPOR just about market-ready as we wish to down-size from acreage. After we sell, we will find a house to rent and will no longer own a PPOR until we move to WA and retire in a few years.

(1) We have several investment properties. Are we able to nominate one of those investment properties as a PPOR even though we have never lived in it? The property is leased and we show the income and claim expenses in our tax return.

(2) We own a duplex block and plan to build soon. If we use the cash from the sale of our house to build the duplex, and then later on decide to buy a PPOR by withdrawing the equity from the duplex, is the interest deductible? (we think not.)

We're only a couple of years off retirement and have probably reached our borrowing limit.

An alternative may be to keep the cash from the sale of our PPOR in the bank and borrow to build the duplex (which the bank would agree to with our cash as an offset to this), but it doesn't make much sense and we'd pay tax on the interest earned.

Or we could live in one of the duplexes, however I think to do so we'd need to strata title so we can claim expenses on the other half. We'd rather keep the whole duplex as two rentals as they will be cashflow positive (after taking into consideration the rent that we will pay elsewhere).

Any suggestions on the best way forward?

Many thanks
(1) - No. You have to have lived in the property to claim it as your PPOR.

(2) - Again, no. Whether interest is deductible or not depends on what the borrowed funds are used for. If the borrowings are for a PPOR, then interest on those borrowings will be non-deductible.

You could borrow to build the duplexes, and put the funds you have in an offset account. Pulling funds out of the offset account would not effect the deductibility of interest on borrowings to build the duplexes.
Why not look at using a discretionary trust for the duplex. You can then lend to the trust and the trust can later borrow to pay you back and the interest should be deductible - but if you are about to retire it may be difficult for the trust to borrow down the track.
Is it feasible to move into one of your IPs?

This would enable you to use it as your PPOR while you are living there, and after you leave until you establish another PPOR.