Forum Replies Created
Owners Corporation Act in VIC http://classic.austlii.edu.au/au/legis/vic/consol_act/oca2006260/
*Is there still a law that i can defer my capital gains tax if i invest into another property?
I am a tax lawyer and as far as I know there has never been such a law.
It may be possible for certain small businesses to defer capital gains on the sale of a business but not for property investors.
Yep too late. You could have delayed settlement until they were working again.
You could try to sue the agent, but what evidence do you have?
Should we use that equity towards a deposit for the investment or should we borrow against our PPOR for 20% deposit then another loan against the investment property?
Isn’t this the same thing?
Generally a loan for a main residence purchase will have a lower interest rate for a loan for an investment property purchase. So one strategy is to borrow against the main residence, debt recycling along the way and using these funds for the investment. this way you will get at least part of the investment loan at owner occupied rates, yet still maintain deductibility of interest.
You can also avoid using 2 properties as security for one loan – cross collateralising securities.
It depends. It can be a good investment I think as often good cashflow and prices can be cheap. But without capital gains you could be tying up valuable borrowing capacity too.
Saving money is good, but it doesn’t increase borrowing capacity in itself.
Strangely though, paying down existing loans does increase borrowing capacity slightly because you will have a longer term on the new loan.
e.g. You have a 30 year loan with $25,000 years to go, you inherit $20,000. If you use it to pay a deposit, you might be able to borrow say $100,000. but if you were to repay that existing loan and then borrow more money you might be able to borrow $125,000 – because the new loan will have 30 years generally.
This should work well with owner occ loans, but will even work with IP loans. But there are many tax issues to consider before paying down a loan.
There is more to considering ownership structure than income tax. keep in mind all the legal considerations too such as estate planning, asset protection, land tax, stamp duty, control, ability to mortgage and ability to borrow, also social security act is something to consider.
Interest would only be deductible if you borrowed to acquire a property. If you pay cash you would have acquired it already. If you borrow against the property after settlement what you use the money for would determine deductibility.
See s 8-1 ITAA97
I don’t see it as unfair. Imagine that interest was deductible based on security for the loan. I would borrow against a property and have a tax deductible holiday.
Speak to your tax adviser about how to structure things so that any purchase price is not cash. You might lend your cash to a trustee or to a spouse who buys it, then later refinances and pays you back etc
Not doing this maybe a better plan!
What could happen if one of you dies, goes bankrupt, family law separation, capacity, have a falling out, wants to sell etc?
If on separate titles it might be worth considering, but on one title there would be many issues to consider.
Also, are you properties paid off now? If not could you qualify for finance again?
Seek legal advice on the risks.