Forum Replies Created
Consider forming a SMSF with another family member?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Qlds007 wrote:For what ?Cheers
Yours in Finance
Administering debt agreements!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
What is a debt agreement administrator?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Sounds like your broker has given you what you asked for. It is not wrong, but could have been set up more effectively I think. However, if this property were never to be rented out it won't matter too much. You are only disadvantages in the relatively short time before you move in, and even then probably not much.
But, if there is a slight chance that this property may one day be rented out again then consider a IO loan with a 100% offset account.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Just keep reading, with a critical eye, and you will learn.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
jate wrote:Thanks Terryw and PLC. You guys are always so quick and on the ball on these forums.Glad that you can provide such helpful hints and advice for us all.
All these new accounts I've suddenly acquired from my mortgage broker after refinancing/restructuring was really confusing me.
Very different to the simple days I used to have things where each accounts only corresponded to its property. It was neat.
Decided to map this out in a diagram today at work to get my head around how things used to be and possible options how I can go about things moving forward (see below). Hopefully i've got things right now *fingers crossed*
https://drive.google.com/file/d/0B027-SCim7iANlJLVVJELVhOTEE/edit?usp=sharing
Let me know if you got some better tips/suggestions?
Hope your broker is not giving tax advice.
I am not sure I understand your diagrams. Do you have an offset account and a separate account savings account? All rent and income should probably be going in the offset account.
Do you have 2 LOCs? If so, Any reason?
What does the highlighted bit mean? Are you using one LOC to pay the interest on the other LOC or another loan? This would be capitalising interest – see my comments above
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
ClintBlakemore wrote:well i can redraw the money back as i have been to do up the house… i know i stuffed up after i saw my accountant.the 100k loan is based on my current loan i have at the moment plus what i can add to the loan towards another house
My girlfriend is heavily considering going in with the other property that we want to live in.
Im just a beginner to all of this and if a broker can give me a better insight then ill try to see someone
Its tax advice you need.
Redrawing money out of a loan = new borrowings so the interest on that part won’t be deductible if you use it to acquire a new main residence.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
FMS wrote:Terryw wrote:You are incorrect here. An offset account is completely different to redraw. You could be creating a very messy and costly situation by using redraw.I suspect sanasar may have been given incorrect advice at branch level in regards to offset v redraw as they will tell people it is the same thing?
I had a bizarre conversation with a branch staff member just yesterday when one of my clients went into a branch to transfer IP funds from a PPOR offset back into the redraw of the IP loan. She said what I was doing was "very strange". I attempted to explain contamination of funds to her after she asked why I wanted to transfer the funds back to redraw but she was not interested in the answer. One staff member at a previous branch she visited the same day refused to do it as it 'wasn't necessary to move the funds as she was offsetting interest on her PPOR therefore it balanced itself out!" What the!!!!
Not one for bank bashing as I see them as business partners but the general ignorance is astounding. I guess you don't know what you don't know but then hearing the correct strategy and not being interested in the answer is what perplexes me even more so.
I would suspect you are right!
Bank staff cause the majority of the tax problems with investing that I see.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Oh dear! You have been paying down a rental property loan. This would cost you thousands of dollars in extra tax and interest over the years.
You should speak to a broker about your borrowing capacity as you may be able to afford both. Get some tax advice too about how to structure things so as to save some tax.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You are incorrect here. An offset account is completely different to redraw. You could be creating a very messy and costly situation by using redraw.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
PLC wrote:Terryw wrote:jate wrote:Would anyone ever use a Line of Credit to pay off monthly loan repayment interests instead of taking it out of a normal transaction/savings/offset account? or will the banks somehow not really allowed because it too is 'borrowed' funds?For example:
Property A – Loan – Monthly interest charges $111.11
Property A – LOC – $100,000 limit available
Property B – Loan – Monthly interest charges $222.22
Property C – Loan – Monthly interest charges $333.33
Therefore the LOC against property A with the high limit is treated as the "master" account where we normally pay for the utilities, bills, etc. can also be used to pay the Loan Interest repayments on Property A, B and C's loans? or would people normally just treat each one separate and use a standard transaction/savings/offset account to make payments to all 4 accounts directly?
Of course, keeping in mind trying to maximise deductibility and all that too.
Yes. But this should only be done after seeking tax advice and probably obtaining a private ruling from the ATO. Interest on the LOC may not be deductible depending on your reasoning.
Terry, isn't this type of structure frowned upon by the ATO? Was there a ruling recently on something similar to this?
Or is it only if PPOR debt is involved as well as investment debt that the ATO don't like it?
Cheers
Tom
Tom, the ATO don’t like anyone saving tax!
Interest on interest is deductible if the underlying interest is deductible. However, the ATO have issued a TD saying they may apply part IVA of the ITAA36 if someone is setting up a scheme with the dominant purpose of paying off the home loan sooner – ie saving tax. But this doesn’t mean you cannot do this as there may be other reasons to structure you affairs this way.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
jate wrote:Would anyone ever use a Line of Credit to pay off monthly loan repayment interests instead of taking it out of a normal transaction/savings/offset account? or will the banks somehow not really allowed because it too is 'borrowed' funds?For example:
Property A – Loan – Monthly interest charges $111.11
Property A – LOC – $100,000 limit available
Property B – Loan – Monthly interest charges $222.22
Property C – Loan – Monthly interest charges $333.33
Therefore the LOC against property A with the high limit is treated as the "master" account where we normally pay for the utilities, bills, etc. can also be used to pay the Loan Interest repayments on Property A, B and C's loans? or would people normally just treat each one separate and use a standard transaction/savings/offset account to make payments to all 4 accounts directly?
Of course, keeping in mind trying to maximise deductibility and all that too.
Yes. But this should only be done after seeking tax advice and probably obtaining a private ruling from the ATO. Interest on the LOC may not be deductible depending on your reasoning.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
A Russell wrote:My daughter and I want to buy investment properties however to protect my current assets I have been advised to set uo a company. In my situation is it better to Have a company or trustBest to get proper legal advice on this. Companies or trusts may not protect your current assets to any great extent.
There are lots of other issues to consider also such as land tax, 50% CGT discount (not available for companies), loan structuring – for both asset protection, taxation and serviceability. etc
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Be very careful about this. Multiple legal issues involved.
From a tax perspective this could be a rebate. Actually it could even be treated as income.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Paterson00 wrote:Qlds007 wrote:Charlotte which lender did your current broker advise and why?From what you told me by email i have an idea who i would have recommended especially with 100K deposit but always interested to hear what someone else in the industry recommends.
Just ask your Broker do they own a property or two and then secondly do they owe anything on them?
We can all buy a property and gear 110% but when you can live off the rent because owe nothing on them that is different.
Cheers
Yours in Finance
What does it mean to gear 110%?
borrow 110% of the value of the property
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
wilko1 wrote:Is that because he could of been seen as "finding" the property to onsell to the current money partnerIf no consideration is passed between the two would it still constitute a onsell?
It would be, possibly, treated as an onsell. But, I think in Victoria there may be duty concessions if it was sold at the same price – possibly no additional duty. Don’t think this would occur in NSW.
Vic has many nice stamp duty laws!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
wilko1 wrote:Wouldn't "and or nominee " work in this situation. Then just assign through your solicitor to the person who is purchasing the property. Or is that just something you don't want to do with a money partner in case they leaving you holding the bag.Be very careful or this could result in double stamp duty
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If you are signing a contract you would need to sign it and enter the contract in the name of the legal owner. This means whoever will be on title needs to go on contract. If you change names on a contract you could be up for stamp duty twice.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Depends what you mean by 'offer'. If you are signing a contract you would need to sign it and enter the contract in the name of the legal owner. If he is the money partner wouldn't you be the one on the title?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Ps, just noticed Tahmoor – I sold 5 acres there a few years ago and made a killing. 5x what I paid for it!
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
