Hi kjs

Units in the countryside! These are not something I would ever consider myself.

This deal looks rather expensive, what are comparable prices like there? The yield is not that good, you may only be making a few dollars cashflow after tax.

6 units on one title may mean more difficult to get finance – ANZ maybe good for this, but they would probably only lend 70%.

Are there any capital growth prospects?

On a positive note, you may be able to strata title them and sell them off individually.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

say its worth $500,000.

Just think of it as a sale of the property and then repurchasing it.

Assuming they will split it evenly, that means your dad’s share is worth $250,000, less his share of the loan of $50,000 = $200,000.

Same with your mum.

Now your dad will gift you this $100,000 of his $200,000 and you buy the same property with your mum. You have $100,000 equity and your mum has $200,000 equity with a combined loan of $200,000.

Maybe you could split the loan in 2 and have 2 separate loan accounts of $100,000 each.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

Its amazing isn’t it. There would be legal recourse, but it is difficult if the fraud has not been discovered straight away and the person used a false identity and has cashed the cheques and done a runner.

Its amazing that the Land titles office doesn’t record dates of birth too.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

Hi Karlm

Sounds like you are putting all your money into the LOC which was used to fund the deposit for the investment property. If this, this is not very good. You are mxing investment and personal money in the one account so apportioning interest at tax time will be hard. Worse, every $1 you put in you are reducing the deductibility of interest and your investment portion of the LOC will be paid off in no time, and you will not have any deductions.

Luckily it is a relatively small amount. The best way to structure in this situation would be a LOC and a 100% offset account linked to the home loan. Don’t pay anything except the monthly interest on the LOC and put all spare money in the offset to save you interest on your home loan.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

Yes, but remember paying off debt is different to paying expenses and the trust may still make a profit which will have to be distributed.

Its just like yourself owning a property with a loan and earning $30,000 per year. If you paid off $30,000 in debt your income would still be $30,000 and you would have to pay tax accordingly.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

CT

You are talking about hybrid trusts. With these the person borrows money to buy the units in the trust, not the property.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

Woodo

Keep you loan as is and get another loan as a LOC secured against your home. This loan can be used as deposits so your new IP loans can be stand alone – ie not cross collateralised.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

Hi Pos

Someone else has recently asked me a similar question – might have been you?

With a hybrid trust you do not borrow and lend to the trust. You (or one of you – the hughest income earner usually), you borrow from the bank to buy units in the trust. So the trust sells you the units. The security for the loan is the trust property.

If you were the unit holder, you would get the loan in your name. The owner oif the property would be the trustee.

If your wife then wanted to buy a property, this is ok. I beleive another person could also buy units in the same trust, but the trustee would still own the property.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

I think CJ’s example would be fine – but check with your accoutant. As far as I know the six year rule starts again ocne you have moved in. So you could rent it out for 5 years, move in for a short period, and move out and rent it for another 5.9 years and just keep on doing this. As long as you are not abscent for mor than 6 years in a row, then it should be CGT free.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.

St George is very good with hybrids as are Mqcquarie. Bankwest can be good in some circumstances, but they usually want too many guarrantees. ANZ – it depends on who you get assing the loan there.

Terryw
Discover Home Loans
[email protected]
Send an email to get my newsletter.