I don’t think any state govt department would be endorsing any sort of legal documents. An irrevocable poa might be solid, but it could still be revoked on equitable grounds – such as undue influence, duress, fraud etc

There was a recent case involving a binding financial agreement (prenup) which failed because the husband basically applied…[Read more]

Lenders look at their notional cash flow figures based on PI loans, on remaining loan terms, usually at around 7%pa.

Are you a spender or a saver? Generally it would be better to get the tax savings every paycheck, but not if you are a spender perhaps.

If your estimated deductions are enough you won’t have to pay any tax, but you can’t just go making up figures to artificially reduce the tax paid through wages. If you do there could be penalties imposed.

No it will improve

Yes the cash flow consequences would be entirely different, but here we were discussing serviceability. The lenders will treat any IO loan as if it was a PI loan.

Its just a question of which will grow faster?

You will need to make some educated guesses.
Can you add value to the house that you can’t to the unit – granny flat potential, extension, converting room into bedroom etc.

Benny – the maximum available IO period is 10 years now but the loan term maximum is 30 years so it would be a 10 year IO reverting to 20 year PI.
When assessing this the banks will assume it is a 20 year PI loan as the IO period is disregarded.

The only way a IO loan could be better for servicing than a PI loan is if the remaining PI is…[Read more]

it will depend on what you do. It could be $0 to $10,000 to set up with $0 to $257 to more in annual fees.
e.g. a gift and borrow back from parents would cost about $2,200 to set up and nothin to run.

it will probably improve serviceability slightly because the assessment of existing loans is generally over a term excluding the IO period. e.g. a 30 year loan with a 5 year IO term will be assessed as a 25 year PI loan. Buti f you are 2 years into it and convert it to PI it would be assessed as a 28 year PI loan. The longer the loan period the…[Read more]

Yes there are asset protection strategies you could use.

You should probably speak to a broker about working out your borrowing capacity before you start looking for deals as if you can’t borrow then you are unlikely to able to buy (without getting creative).

Get some independant legal advice.

depends. It would be either CGT or income tax depending on the situation.

Don’t forget the GST aspects.

yes you would need an agent unless you can find a buyer yourself. Before engaging the agent you would need a contract of sale or speak to a lawyer about assignment/nomination.

perhaps, but consider what the consequences could be.

Only lawyers can draft legal documents. Most lawyer should be able to assist with a loan agreement.

movement of capital from a trust doesn’t in itself trigger tax. Only if it is income or capital gains will it trigger tax – consider stamp duty too.

If you have lent money to the trustee how is this documented? Is there a written loan agreement? If this would would have the terms of the loan. If not it is an oral contract and this will cause…[Read more]

Yes, there are a number of ways it can be structured. You will need legal advice on the foreign acquisitions and takeovers act and regs

ATo are only concerned about deductibility of interest.
Transfer of cash generally doesn’t trigger tax.

You should consider the legal effects
– is it a gift or a loan?
– how is it documented?
– if a loan what is the interest rate?
– limitations act
– who the trustee is
– what happens if you lose control of the trust?
– what happens if you die?

Most lenders will treat guarantees the same as taking the loan itself for serviceability purposes so using a ‘trust’ will not help in this regard, but could hurt because any loss will not save you tax so negative gearing addbacks won’t help.

But careful structuring of a trust can also improve serviceability in other ways. I think I have written a…[Read more]