Hi Carlin

Sounds like your accountant hasn’t heard of hybrid discretionary trusts.

These are a discretionary trust with a unit component and effectively allow negative gearing to occur.

What you do is get the loan in the unit holders name, not the trustee (but they could be the same). The unit holder borrows money to buy the units, not the…[Read more]

Ptn, lets try and work out why your head hurts. I love ‘talking’ about trusts. What don’t you understand?

With a trust, you can have a person (or more than one) as trustee or a company (or I guess more than one company) as trustee.

Whichever you chose will be determined by your risk profile. Trustees can sometimes be sued (eg tenant trips), so…[Read more]

PTN, I think you may have misunderstood Dale GG? Maybe he was recommending a corporate trustee for your situation.

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A HDT need not have a company as trustee. Not having one actually makes it easier to get finance,

[as banks get worried when the title is in one name (the company) and the loan in another (in high tax payer)].

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I think they both use the same deeds. The difference is probably Dale has quoted to include a company as trustee.

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Sorry Redwing, I think I misread your post. You want to pay the interest in advance on a loan by drawing the money for this from a LOC.

A few years ago, you needed to get a discount to be able to claim the interest in advance. The rules have been tightened since then, but it is still possible.

With rates, insurance etc. I think you ca n just…[Read more]

You cannot pre pay interest with a LOC. It needs to be a fixed loan. WIth a LOC the interest is charged monthly, so any payment made in one lump sum will just go off the outstanding balance, and then each month interest will be added – and capitalised if you do not pay.

Terryw
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Chris Batten is very well known for his strategies. What have you got to lose by signing up? a tax deductible $99?

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KF

These days many lenders will accept borrowed funds to be used as deposit. As long as you can service both loans, then no probs. Also many will not even ask where you deposit is coming from if hte loan is under a certain LVR.

Terryw
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Have a look at http://www.chrisbatten.com.au for some ideas on super.

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Sounds like a potentially good idea.

The initial sum is borrowed for the investment, but temporarily held in a savings account. So it may work. best to run it by your accountant. If they say no, try a few others too, just in case.

Terryw
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Caitlyn

This will generally show up as a capital gain on your tax return. Banks are generally reluctant to take capital gains into account as they are usually one off. If you can show you have done a few, however, they are more likely to accept it.

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salsachinita, it may be better to do as Derek suggested and buy your father out now. This will make things easier for you – especially if you are going to want to keep on withdrawing equity every few years. Maybe buy his share with a new trust?

There may be affects with your father’s pension (if he is getting one). If he isn’t retired yet, this…[Read more]

Hi Ptn,
Westpac are not very good with trusts at all, but many other lenders are.

Accountant Coastymike has recently mentioned hybrid trusts cost around $1100 to setup. https://www.propertyinvesting.com/forum/topic/23356.html

DT can cost as little as $140 on the net, but if seeing an accountant, then this would be around $1100. You can also get…[Read more]

One of the standard loans wiht a major bank is probably the way to go. eg Bankwest’s Lite Home Loan, 6.65% with about $300 in exit fees.

With brokers, we usually have to give back all or most of the commission if the client’s loan is repaid within the first 12 months.

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Ptn

Why do you say hybrid trusts cost too much? It may be a few hundered extra, but surely the tax saved in the first few weeks would exceed this???

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Hi

Usually, You would get the personal loan and on lend the money to the trust. You would charge the trust the same interest rate (usually) and would have to declare this as income, but this income would be offset by the interest on the loan you pay to the lender. So in the end, the trust claims the interest.

I don’t think you can personally…[Read more]

Depends on many things, like is it cashflow positive? Who earns the most income? etc

I would say, probably a hybrid trust is best, with the unit holder being the higher income earner.

Best check this with a good accountant.

Terryw
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6 months is a rather long time. Hope you didn’t have a 42 day settlement!

Why did it take so long, and why didn’t you just go elsewhere?

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What about buying to live in first (maybe rent out a spare bedroom), get the grant and establish this property as your PPOR. You will then be able to rent the place out and claim all deductions and still be exempt for up to 6 years from CGT. You can get your cake and eat it too!

Terryw
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