Forum Replies Created
There have been a lot of similar posts recently with people wanting to sell to access equity.
I cannot see the point in selling one property to buy another? Why not just keep and increase the loan to 90% or even 95% and then use this money as deposits on the next ones.
By selling you are incurring fees and then fees again on the purchase again. Can’t see the point unless the property is a dud??
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
I believe the expenses must be shared in the same % as the ownership of the property.
So if B has no income the deductions may make an overall loss. This loss may be able to be carried forward to future years and it may get larger and larger for many years until the property would be become cashflow positive. Then the income would be offset against the loss until it is all used up.
This may have been avoided if you had used a hybrid discretionary trust structure – could have saved you a bit more tax a long the way.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
Julie
I think you should have a company for your business for sure as this limits liability. But for property purchases, this is generally not recommended for lack of asset protection (the shares are an asset in your hands) and the lack of tax flexibility.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
Hi Swifty
You probably would only need a HDT if you are going to be making a loss. HDTs are a way around the fact that trusts cannot offset losses. So if you are buying cashflow positive property, then it may not matter. If you have a HDT, the costs will be higher (running and set up) and it is harder to get finance, or rather there may be less lenders willing to lend to a HDT than a normal DT.
You should discuss this structure issue with a good accountant.
For your existing loans, if you look at the loan contracts you will find the property that has been used as security for that loan. If it has two properties listed then they are crossed. If one then not.
A way around this in future is to use a separate lender. Or just insist the securities not be cross securitised. The lender should comply with your request. Or better yet, use a broker.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
Since youhave a lot of equity you could get a loan to purchase another property fairly easily. But if you think you cannot afford the repayments, it may not be wise. Your home loan is low so you will be paying more tax on the rental income you would receive if you rented this out, and at the same time the interest on the new home would not be deductible as you would be living in it.
A way around this is to sell the unit you are living in now, maybe to your own trust, and use the proceeds to for a large deposit on your new home. The advantage of doing this is it will turn the whole mortgage on the old place 100% deductible and reduce your non deductible loan saving you tax and interest. But there would be stamp duty involved, so you would need to do some calculations to see how long it would take you to recoup your expenses.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
Originally posted by Captain M:Hi, I’m new to property investing. I’m in the process of finding tenants for my first investment property.
I was told that landlords insurance was a good idea, so I did some research, and came across TICA (www.tica.com.au) which provides landlords insurance. The application form:
http://www.tica.com.au/files/tica_application_form.pdfseems too good to be true. In that its offering Landlords contents, Legal Liability, Fire, Malicious damage by tenants, Rent default with a nill excess, all for $225 in Victoria.
I’ve read the PDS, and the only thing that worries me is:
“Provided that no claim will be admitted until such time as any monies collected under the state legislation applicable
to residential tenancies are exhausted.” Which to me mean that they will not pay up, until it goes thru the whole legal process. Which may be never!So my questions are: Does anyone know anything about TICA, and does this LandLords insurance policy sound too good to be true?
ps.
Glad to be finally on board the forums, after a lot of reading!you generally must offset any loss against the tenant’s bond money first. I think this is what is being referred to above.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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 have cash in the bank, then it would be best to pay down the PPOR loan (as the interest is not claimable) and then to reborrow this for investment purposes – interest will be claimable.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
Someone has just alerted me to Chris Batten’s reply to this same question posted on another forum:
http://www.somersoft.com/forums/showpost.php?p=273254&postcount=21It seems HDTs are looking more and more unstable, taxwise, day by day.
Chris Batten is a tax and trust expert. see http://www.chrisbatten.com.au
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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 will need to get your 3 IP houses valued by your lender and then if the LVRs are 80% or less you can apply for a release of security.
If your LVRs are over 80%, you could get your home valued too and then get a LOC over this, and use some money from the LOC to pay down the loans on the IPs to make it less than 80%. Or if you had some cash you could use that too.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
Acompany is usually not a good idea for growth assets as there is no 50% CGT discount available. You should probably use a trust structure. You will then have maximum flexibility in minimising tax by distributing to a wide class of individuals and then a company if need be, capping the tax rate at 30%. Remember individuals have a max tax rate of 48%, so this works out to be 24% after the discount.
Construction of 6 units is also much different to building one house, so you should seek expert advice.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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 could probably sue the tenant (btw did you mean 2006?), but it may be better just to find another – easier and you will be helping him out.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
I don’t think there are many reasons to consider wrapping is better than postive cashflow property. Maybe it is for the wrappee as they get the property. but for the wrapper, they may get a bit of extra cashflow, but they lose any future capital growth – unless the wrappee defaults etc.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
With contract law an offer is binding if accepted, but in the sale of land the contract can only be enforced if it is in writing. ie. contracts exchanged. Without your signed contract they cannot enforce it.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
Originally posted by dee dee:I’m not having much luck figuring this one out!
From reading other posts on the forum, I notice that people suggest it is better to have an offset account linked to IO loans. I have a split loan (small amount P&I, rest IO). I’ve previously been advised by my mortgage broker (who seems to have gone AWOL) that it is better to link the offset to the P&I portion because there is no penalty with how much I put in there, whereas if it is linked to IO there is a penalty after I put in more than 10k per year. I’m happy to pay the penalty if there is a more compelling reason for choosing this option. Can someone please explain the benefits of this (laymans terms please) so that I can make a more informed decision?I appreciate your thoughts.
hi
I think your IO loan must be fixed. There is usually no restricitons on paying extra off a loan because it is IO, but there are restrictions if the loan is fixed.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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 can get a Low doc loan or a No Doc loan if you are self employed.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
It is probably not worth it if you are going to do one or two properties. There is a lot to learn with the different markets, laws, proceedures etc, and it can be costly getting small amounts of money back to Australia.
I wouldn’t recommend it unless you are familiar with the country and the area you are investing in.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
It depends if you are paying tax in Australia. If you are working o/s, then unless you have other income in Australia, then you won’t be paying tax here, so there is nothing to offset. The loss from the property can be carried forward so when you do come back you can then offset the accumulated loss from your income then,.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
Yeah, its a usually a good idea to have a few loans with the one lender so you can get the bigger discounts. The annual fees are around $300-$400, but you usually get the app fees waived as well as any monthly fees etc.
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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 you might be in NSW? I think the penalty is approx. 20% pa penalty interest – not much really
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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 you might be in NSW? I think the penalty is approx. 20% pa penalty interest – not much really
Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.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
