Not sure I understand, but

Rent is income and interest is an expense.

Well, she didn't borrow the money so she couldn't be held responsible. But the bank holds a mortgage over the property which would give it first priority.

Sounds like she wants more money than is left over. It could be a case of her being unreasonable or she may be thinking the husband sold the property too cheaply.

You are in a very difficult situation, especially if you are left homeless because you were thinking you could move into the property.

This thing is likely to drag on for a long time. Could me many months or much longer.

You both (you and verdor) should be able to exit the contract by mutual agreement.

You may also be able to terminate the contract for repudiation to due a unreasonable delay in completion. You are ready willing and able to settle, the other side is not able to.

Or you can wait it out.

There is always a problem with a caveat as caveats prevent dealings in the property – ie prevent sale.

There is a caveat because the wife is trying to protect her interest. It is her property too even though she is not on title. She has an equitable interest and a right to lodge a caveat. This is under the Family Law Act as well as common law.

I think the Supreme Court will be unable to lift the caveat while there is a family law dispute in place . The vendors solicitor can't simply lift it.

The best way to move forward is to try to get the wife to talk to the husband and get her to willingly lift it. But you can't get involved with this, but put pressure on the husband's solicitor to do so.

You should never have exchanged knowing there was a caveat on title as this was bound to happen. Did your solicitor advise you about the caveat and the risks?
 

This can drag on for a very long time. You are unlikely to be able to settle and should consider rescinding the contract.

The problem is the husband cannot sell the property without the wife's permission as it is her property too.

Was the caveat on the title at the date you signed the contract?

And what state is the property in?

a company that provides consultants.

Hi

You have to be careful with the usage of LOCs it is possible to contaminate them from a tax perspective.
Firstly, withdrawal from a LOC is new borowings
Deposit into a LOC is a repayment of a loan.

The easiest way to explain is with an example.

say you had a $100,000 loan as a LOC
You get your wage for $4,000 and place it in the LOC. It is now down to a balance of $96,000.
You take out $3,000 to live on. This means you borrow $3,000. New balance is $99,000

If this was an investment property then only interest on $96,000 of the $99,000 would be deductible.

This is for the first month, imagine what happens if you continuously do this for a number of years. You could end up with a loan balance of $99,000 with none of the interest deductible.

If the loan was on a PPOR and not being used for an investment in anyway it is still not a good idea as you could more out of your home and rent it later on..

You should also not borrow from a LOC for an investment expenses if you have been using the LOC for personal use.

If you are using a LOC for the deposit on an investment (and this use only) and borrowing the rest via an IO loan, then I would still suggest you not pay down the LOC, even if the rate is higher. You should be paying down non-deductible debt first, or putting the spare cash into an offset account on the non deductible loan. This will save you more.

Once you have no non-deductible loans left then you can set up an offset account against your investment IO loan and store the cash there. It is not good to pay down an investment loan as your money is locked away and cannot be withdrawn without tax consequences.

I just reread your post and see that you are renting now. So at the moment it has no effect.

But if you could have problems in the future.

This $100,000 is basically cash, but has been used for investment purposes. Therefore there is less cash for you to use for personal items. If you ever buy a new house to live in, for example, you would have $100,000 less deposit and would have to borrow an extra $100,000.

Interest on $100,000 is approximately $7,000 pa. On an average tax bracket of 30% = a potential tax saving of $2,100 pa.

So, what you could have done is to get a LOC on your property and borrow the $100,000 to invest. The interest on this borrowing would have be deductible. The $100,000 cash that you didn't use would stay in your offset would have been still available in the future when you purchased your new PPOR.

This sounds ok.

Did you withdraw any money paid into the loan?

Ideally you should have an IO loan with a 100% offset. All income will go into the offset, including rents, wages, inheritances etc. Everyday money is in there it is saving you interest off the loan, so adding a interest free credit card can help you keep your money in the account longer saving you even more interest – but make sure you pay it off in full.

When you go and buy a new property if it is an investment then dont use the funds in the offset, but set up a LOC on the equity in the property and then borrow that for the deposit. Get the remainder from the same or another bank without using the first property as additional security.

Andrea,

Perhaps Andy could do a binding financial agreement for you regarding this property (and any other matters). These can be done before, during, or after marriage and are binding under the Family Law Act (if done correctly).