Forum Replies Created
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.
Mortgagees have fiduciary duties to get the best possible price and so do executors. They are also more difficult to negotiate with so I think this will be a hard way to find an undermarket value property.
Which would make you more money? How would you fund the GF?
Often adding a granny flat won’t add as much value as they cost, but they can increase the rent a fair bit.
Accountants can only advise on the commonwealth tax aspects of trusts. You will need a lawyer for proper advice as Trusts are complex legal arrangements between beneficiaries and the trustee involving obligations over property. Trusts are not separate legal entities for example.
Borrowing capacity would be potentially more with a trust (could be less too!)
best to see a lawyer if you want to consider asset protection as this is legal advice after all. You can achieve asset protection while retaining legal ownership of assets, but how you set it all up will depend on what you are trying to protect yourself against.
Maximising borrowing capacity is credit advice so you should see a broker about this.
Perhaps you might have some recourse to insurance, although you did give him permission to be there so he is not trespassing.
Best to seek legal advice.
If you borrow more money the interest deductibility will depend on what the money is used for. if you build a shed on the same property the interest on this will generally be deductible if the property including the shed is rented out.
But if you borrow to recoup cash paid the interest will not be deductible.
if you do this you should split the loan into 2 portions. The shed cost can go on the same loan, but the personal recoupment on a separate loans.
best to not let an accountant decide whether a transaction is a loan or not.Take some tax advice and then get legal advice on the consequences plus how to record things. Mere accounting notations are not enough.