Builder Insolvent Tax Strategy

[Anthony Giambalvo]

Hello,

We have found ourselves in a terrible situation.  We moved out of our home to do a large renovation and rented a house for us to live in.  When we were supposed to move back into the renovated house we bought the house we were renting and our builder simply stopped talking to us.  We found out from other sources he was Insolvent.  Unfortunately he had already been taken the roof off and collected a large payment for the frame. We then spent 1 years waiting on QBCC, paying 2 more mortgages, watching rate rises etc.  We now have a new builder and expect to finish in May.  Which house should we plan on renting from a tax strategy perspective?  The original plan was to live upstairs in the renovated house and rent downstairs.  

Any advice on how we can slowly makeup for the money our builder stole from us is greatly appreciated.