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Generally I hear it is around 2.5% in Sydney
Terryw
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They basically lend you the deposit. It is up to your negotiating skills as to the terms – eg. how much, what % rate (if any), term, IO or PI etc.
Terryw
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Lets hope your solicitor has heard of these.
Solicitors are like accountants most do not know about trusts, although it is a subject of their law degrees. I had a solicitor as a client who had 4 investment properties in his own name. I asked him why he didn’t use a trust and he just didn’t understand it all.
Terryw
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Originally posted by DaveA:As for accountants a lot of them are simply USELESS and know very little about trusts. Ask them what a “Hybrid Discretionary Trust” is and most of them won’t know the answer.
i very much agree to this, i am actually a unversity undergrad studying accounting in my final 6 months, nothing we have done have covered trusts (except a tiny bit on how they are taxed) and there are no electives for us to take and learn about them. [baaa] I Have friends working in a range of accounting firms which none of them know at all, they dont even know if there practices set them up so this is why im just that little concerned when im told to see an accountant as they can help me
Hi Dave
I think trusts are a very specialised area. The National Institute of accountants and various other bodies run courses on Trusts for accountants etc. Continuing development. have you seen the Atax Masters courses, http://www.atax.edu.au. There, you can spend whole semesters on Trusts, CGT and even a whole subject on Stamp Duty!!
Terryw
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Yes, Trust Magic is the best book on trusts for the average person. It is written in a very easy to understand way. Well worth the money.
http://www.gatherumgoss.comTerryw
Discover Home Loans
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Originally posted by tom1000000:Originally posted by Terryw:yes, there are many different deeds so the accountant can help decide if you need a unit or discretionary or hybrid etc. Also the accountant can help decide who does what role. eg if you put your son as appointor you will never be able to distribute to him = one of my clients did this!
Terry,
I think this is a rare occasion where you are wrong. It is the SETTLOR who cannot receive distributions, not the Appointer.
As for accountants a lot of them are simply USELESS and know very little about trusts. Ask them what a “Hybrid Discretionary Trust” is and most of them won’t know the answer.
Yes, Thanks Tom you are correct. I meant to write Settlor, not the appointer. Sorry.
Terryw
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very interesting Andkoz, please keep us informed how you go.
Terryw
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Maybe you need to sue the body corporate. Probably best to talk to the department of Fair Trading. I think they handle these sorts of problems.
Terryw
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You can borrow the equity and on lend it to your trust. You will need a loan agreement in place.
Or your trust could use your home has additional security = Cross collateralising. The first option is more flexible.
Terryw
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Hi
I think this is best answered by a tax lawyer. Maybe you could ring or get your adviser to ring Brett Davies Lawyer in WA, see http://www.lawcentral.com.au and http://www.taxlawyer.com.au They are taxation specialists and issue hybrid trusts.
From reading the legislation above, there may be problems as the hybrid trust is not really a discretionary trust.
Terryw
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As Michael would say, by selling your are getting rid of the goose that lays the golden eggs.
What about keeping half and selling half?
you are not really investing if you build and sell, you just have a business. What happens if you cannot work, your income will stop.
Terryw
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Whats the purpose of the loan?
eg.
$100,000 loan on your $300,000 home
$100,000 loan on your $300,000 investment property.If you were to increase the loan on the investment property to $200,000 you could pay out your home loan. You’re IP loan will then really be two loans of $100,000 each.
Deductibility depends on the purpose not the security. So when you move back into your home, the interest on the second $100,000 won’t be deductible as the loan is for your home.
Terryw
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I agree
Terryw
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Oh, and how many deposits you can get will depend on your equity and the size of the purchases.
Terryw
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You may be able to get a 100% loan, but generally you will need at least 5% deposit. You will also need around 5% of the price for costs such as stamp duty etc.
Terryw
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Originally posted by Nobleone:Here’s one for forumites to get their collective teeth into…
Aus PPOR valued at $375k – Owe $220K – $135k personal LOC plus $85K investment LOC…
Investment LOC currently has $48k sitting in it being slowly eaten away by monthly interest…
4 x CF+ IP’s in NZ owned through Aus company & trust set up – Cannot refinance further – Wont sell 1 or any – Not quiet enough CF+ to bring back any realistic cash each month…
Wanted to buy block of land in QLD for 135K – Build 4 bed 2 bath for another $135k – Sell for profit.
Biggest problem is serviceability for new construction loan – collective annual gross income $43K…
Finance broker has said “Best I can get on Low Doc Construction is 80% at 8.5%”
Doing the math this just does not work out… Soooooo question to forumites is there something I’m missing or can you suggest another way to invest the 48K sitting in investment LOC to create cash flow?
Stumped and feeling boxed in[grrr]… Cheers, Nobleone
Acronyms explained;
PPOR = Principal Place Of Residence
LOC = Line Of Credit
CF+ IP’s in NZ = Cash Flow Positive Investment Properties in New Zealand“Making mistakes is just another another tool for learning.”
Your broker must be looking at LaTrobe. Is this going to be an owner builder construction.
If you are getting a builder to do it, you could get a better rate with Macquarie, around 7.73% on a low doc or a no-doc. Depending on how long you have held your ABN for. St George may even be able to do it at a lower rate than this.
Terryw
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I agree that the 100% offset account is the best option. Sounds like you know what you are doing.
If you were to use a LOC it would not work the same way.
When you pay money into a LOC it is considered a repayment. And when you take money out it is considered new borrowings. So if you were to pay down your LOC to nil, and then redraw the money to pay for the new home to live in, then it would not deductible because the funds were borrowed to buy a home to live in, or funds were borrowed to pay down a loan on the home you are living in. The ATO looks at the purpose that the funds were used to determine deductibility.
Terryw
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Really, what can go wrong? If you have landlords insurance and 12 months in advance.
But she may ask for some of those chrome poles to be installed.
Terryw
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yes, there are many different deeds so the accountant can help decide if you need a unit or discretionary or hybrid etc. Also the accountant can help decide who does what role. eg if you put your son as appointor you will never be able to distribute to him = one of my clients did this!
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Maybe she was just embarrassed to tell you she was a stripper. If you have landlord’s insurance, then what could go wrong. Getting the rent up from would be great for you to dump into the offset account against your home loan, but it may also mean you have a higher than usual income for this financial year followed by a lower income next.
Terryw
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