Yes worth considering.

I have a client going through this at the moment in Sydney and he is looking at getting double what the property is otherwise worth.

You could potentially lend your personal money to the SMSF to do this, but watch out as this could result in NALI income non arms length income which would be taxed at 45%.

read some papers by lawyers
A good one is…[Read more]

Hi Rod

It is hardly complex. Split the loan, pay it down and reborrow. Once you have sold the investment the loan can be paid down and kept open for next time. Little effort is needed.

Saving $2000 would be equivalent to 4 weeks work for some people.

It is the most beneficial. But what happens if you take the cash out of the offset and use it for investment properties?

Hi Warren

You really need legal advice on this as it relates to trust law and the interpretation of legislation.

“We are very close to purchasing 2 properties through our SMSF”
The trustee of the SMSF may be close to purchasing 2 properties.

The trustee cannot use borrowed money to develop.
You cannot develop the properties that you don’t own,…[Read more]

Yes the valuer can access and do the valuation. But to get formal approval the titles really need to registered as otherwise what do they put on the mortgage documents.

I got a valuation for a client the other day for a subdivision that hasn’t been registered yet.

Trouble with this, Rod, is that when the cash is used the interest on the home loan would increase. This interest would not be deductible.
If on the other hand you had borrowed up to 80% and stored any excess cash in the offset account, when the time comes to use it you could split the loan, pay off one split and reborrow and use those borrowed…[Read more]

Similar to Corey, I would borrow as much as possible and buy a main residence and then debt recycle the debt down.

This will have tax and other benefits
– nice large CGT free asset going forward
– no rent being paid
– owner occupied rates on investment.

e.g your borrowing capacity is $600,000. You could buy a property for $750,000. Use an 80%…[Read more]

Yes you can, but both duty and CGT would be assessed at market value. This would not save you the hassle of doing the CGT return, even if there was no legitimate profit because the sale is a CGT event and you would need to declare it on the tax return. There are also asset protection issues to consider.

But this is legal advice and a broker shouldn’t be giving advice on trusts. An accountant couldn’t even advise on trusts like this and financial planners even less. Best to leave trusts to the lawyers I think.

Your definition of trusts is wrong. A trust is a legal relationship where one person holds property for the benefit of another under…[Read more]

Bloody hell Steve, are you the author of that booklet? The author appears to be a mortgage broker with no legal qualifications. There are some good points in there, but many errors, especially about the finance and asset protection side of things.

Why would a mortgage broker write about a complex legal arrangement such as trusts?

Well lots to consider. You really need to do some reading and then seek specific legal advice.

Perhaps work out the costs first.

I have only ever had a few clients who have done this a and they had heaps of equity so it was done as part of a debt recycling strategy as well.

Why do you want to transfer the property to a trust?

It’s like buying a book. Doesn’t matter if you are registered or not, but sale price includes gst. If you are registered you can claim the gst if not you wear it.

Why a financial planner? This doesn’t involve financial products so licensing needed.

The only way to retire on negative geared propertied would be to either sell one, borrow against one, or wait till the positive cash flow is enough. Or a combo

Prob a serviceability issue. Short term loans will have very high repayments compared to same loan over 30years

extending loan terms to 30 years if possible can help
Changing from IO to PI can also help
Other than this it is maximising income.

Keep in mind it has a few errors and is overly simplistic so don’t rely on it too much, but I think it can be a good intro.

It will depend on the terms he has agreed to with the agent. Most of these agreements would state that where the agent introduces a buy the agent will be entitled to a commission even if the purchase/sale agreement is entered into after the lapsing of the agent’s appointment.

Great Podcast Ziv – just listened to it.