Yes I can back that up with authority.
You could read the case of ‘Domjan’ for starters.

Your clients should seek tax advise asap.

Hi Fintrack

I think you have confused a few things. Loan purpose for the original portion stays the same, but it can get messy.

If you redraw from an investment loan the interest on the loan doesn’t become non deductible.

There are three ways it can end up
1. You withdraw from an investment loan and use those funds for that investment p…[Read more]

If it is an investment property and will continue to be then you should have claimed the stamp duty back then. It is probably too late to amend that tax return now, so you may have to wait till you sell to claim it off your CGT.

ACT is different to other states as the land is leasehold and the stamp duty is not paid on the transfer of land but on…[Read more]

Rex, Consider what could happen if any of the following were to occur

You
1. die
2. divorce
3. become bankrupt
4. become incapacitated

And what would happen if the other person were to
1. die
2. divorce
3. become bankrupt
4. become incapacitated

Keep in mind there only about 3 lenders that will assess you on your share of the joint debt. The default is you will be assessed on all joint debt but your share of the rent.

Best way would be to pay cash or to borrow against other property. But this is not possible for most.

If you use a trust structure personal guarantees will be needed. There is a way to structure it so that only 1 guarantee is needed – and it thereby affect only one, but whether this is suitable or not will depend on other factors.

You had better get tax advice asap.
The second one cannot be CGT free as the exemption doesn’t apply to land. So when you split the land portion relating to the second property will not have any exemption back to the point you purchased it.

First step is to work out if CGT even applies. “Developing” generally means income tax and not CGT so no…[Read more]

Yes Rex, that is it.

Rex – it depends how you structure it. Generally they will be liable for any loan they are a part of or any guarantee they give.

If you go to a separate lender for the new loan and get the loan in your name only (or without them) they they cannot be liable for this.

Yes. Tax will be payable.

Don’t forget GST too.

Get your mate to apply for a loan with you or to guarantee your loan.

Major advantage is deductibility of interest from a LOC
money from an offset would not be deductible.

Disadantage of a LOC is that it is at call, not good for a developer, so once it is drawn convert it to a IO loan.

If you can use a IO that can be redrawn and paid directly from the loan account then this would be even better.

Deposit is up to your negotiating skills. Usually you will have to pay for the block in full at settlement.

Duty will depend on the state the land is located in.

In NSW it is due 3 months after exchange, but if it is off the plan the duty is not due until 12 months after exchange or on completion (or assignment). But if it is just land with no…[Read more]

Hi Trish

Your solicitor will arrange for the loan to be paid out at settlement unless you instruct otherwise (and have altneratives arranged with the mortgagee).

Yep as Richard says. You won’t be able to settle while there is a mortgage on the property so you will have to arrange the discharge. To discharge the mortgage you will need to repay the loan that it is securing – or to give other security for the loan.

Before you sell just make sure you will be able to borrow again because things have tightened…[Read more]

The definition of a trust is A holding assets for B. Where A and B are the same there will be no trust relationship.

If a tenant sues they will sue the owner of the property – which will be the trustee and if that is you all of your personal assets are at risk. Having a company as trustee can limit liability to the company and trust assets in…[Read more]

Have you sought legal advice on that? Sounds like you are talking ownership structure as well as borrowing structure.

You and your brother as trustees is not a good idea probably – who will be the unit holders?
What protection will this provide and from what?
What are the consequences of owning more than one property in a unit trust? Also run…[Read more]

My strategy with Accessing equity is to use a io loan if it can used toboay directly from the loan account. But if it cant then use a Loc and once drawn convert it to a io loan.

This is more work but avoids the tax risks.

Don’t forget to get your tax advisor to check your loan structure for tax issues.

I agree Richard, but it depends on the bank. If you can pay directly from the loan account you would be better off avoiding the LOC option. If you cannot then you run the risk of losing deductibility of interest by borrowing and parking into a savings account and then paying out.