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You shouldn’t take legal advice from friends. Speak to a lawyer and find out the implications, costs and then consider whether you should transfer the title to the trustee of a trust.
That makes it hard as there are only really two investments out there – property or business and the way to invest in business is via the purchase of shares…
Perhaps look at the different ways to structure your investmnets.
Yes you could use the 6 year rule on property A (providing it meets the other requirements).
But because the absence has been longer than 6 years it will not be totally CGT free. BUt a large chunk of it could be.
I am not sure why it is confusing.
Serviceability is worked out based on a set of criteria which means an IO loan will be treated more harshly than a PI loan assuming the same loan length.
You will still have to prove serviceability with additional income.
This is the same whether you buy a bargain or overpay for a property.
I don’t think any state govt department would be endorsing any sort of legal documents. An irrevocable poa might be solid, but it could still be revoked on equitable grounds – such as undue influence, duress, fraud etc
There was a recent case involving a binding financial agreement (prenup) which failed because the husband basically applied undue pressure to the wife by pulling out the doc a few days before the wedding and saying sign this or the wedding was off. This sort of pressure was unreasonable so even though the document was legally valid, it could not be enforced.
Something similar could happen with a POA.
Are you a spender or a saver? Generally it would be better to get the tax savings every paycheck, but not if you are a spender perhaps.
If your estimated deductions are enough you won’t have to pay any tax, but you can’t just go making up figures to artificially reduce the tax paid through wages. If you do there could be penalties imposed.
Yes the cash flow consequences would be entirely different, but here we were discussing serviceability. The lenders will treat any IO loan as if it was a PI loan.
Its just a question of which will grow faster?
You will need to make some educated guesses.
Can you add value to the house that you can’t to the unit – granny flat potential, extension, converting room into bedroom etc.
Benny – the maximum available IO period is 10 years now but the loan term maximum is 30 years so it would be a 10 year IO reverting to 20 year PI.
When assessing this the banks will assume it is a 20 year PI loan as the IO period is disregarded.
The only way a IO loan could be better for servicing than a PI loan is if the remaining PI is short
Existing loan is PI and has a remaining term of 20 years
The borrower refinances and gets a 5 year IO/25 year PI loan.
Since the new loan has a longer PI period the servicing figures would be better than the existing loan.
But if the borrower went 30 years PI it would be even better still
it will depend on what you do. It could be $0 to $10,000 to set up with $0 to $257 to more in annual fees.
e.g. a gift and borrow back from parents would cost about $2,200 to set up and nothin to run.
it will probably improve serviceability slightly because the assessment of existing loans is generally over a term excluding the IO period. e.g. a 30 year loan with a 5 year IO term will be assessed as a 25 year PI loan. Buti f you are 2 years into it and convert it to PI it would be assessed as a 28 year PI loan. The longer the loan period the lower the repayments will be.
You should probably speak to a broker about working out your borrowing capacity before you start looking for deals as if you can’t borrow then you are unlikely to able to buy (without getting creative).