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You could also try Bankwest, the Lite Homeloan and the Lite Plus.
Terryw
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Also RAMS currently have an 85% LVR Low Doc loan with no ABN required – but still have to have been self employed for 2 years.
Terryw
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Yes, Low Docs are dangerous. One of my clients has already got into trouble with the child support agency about overstating his income.
Wayne, a lot of the Lo Doc loans don’t require an ABN or just an ABN for one day, 70% LVRs.
Terryw
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Keep up the good work, it is amazing how much you can spend without realising it.
Terryw
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some like to sell, others like to hold.
If you sell there are various fees – realestate agent’s commission, CGT, legals, loan discharge fees etc. You will only replace it with another property, so you will be paying stamp duty and more fees again.
If you never sell, you can keep obtaining the captial gains too.
Terryw
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Why sell? You will lose your only CGT free asset and have to pay rent with after tax dollars. Not to mention pay fees on selling.
If you are employed you could obtain a loan on your home at up to 80 to 90% of its value. Then use this as deposits.
80% of $700,000 is $560,000.
If you use this as 20% deposits and allow another 5% for fees etc, you could buy up to $2,240,000 worth of property – assuming you can service the debt.
Would that be enough for starters? By the time you have used it all up, hopefully your house has increased in value and you can draw down a bit more. You then start drawing down on your investment properties as they grow.
Terryw
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further, the low docs are generally up to 80% LVR and No Docs up to 70% – No Docs generally don’t require employment history.
Terryw
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There are a few that lend to casuals who have been in the one job for 12months, so you are nearly there.
A Low Doc loan is one where you do not have to provide evidence of an income. Generally still have to have been employed for 2 years tho.
Terryw
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Your friend sounds correct. If you are living in the house, and have no other, then when you sell you should be free of CGT. But if you are doing it with the intention to make a profit, ie a business, the ATO could assess the profit as income.
Also, if you have another place, you can only claim one as your main residence at any one time (except for a 6 month cross over period which is allowed).
You could also lose the exemption if you are making money from the property – eg renting one room out while living there.
Terryw
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Hi Pos
With a hybrid you will own the income producing units. The trust owns the asset and distributes the income to you so you can pay the interest on your loan. There may be a shortfall, so this can be offset against other income (negative gearing).
You get the loan in your name, but the trust buys the property – it all happens simultaneously. Your accountant will help you with the paperwork for buying the units from your trust.
Terryw
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Hi Elka, yes, sounds like you are self employed!
Terryw
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In my opinion Discretionary trusts are much more suited to owning property (and other assets) because of the asset protection issues and the great flexibility in profit distribution (=tax minimisation).
Companies do not get the 50% CGT reduction and profits must be distributed to shareholders in accordance with ownership %.
Terryw
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Bridgebiff, I am not sure what you are saying here??
On any loan you should only have one security – otherwise your loans will be cross collatoralised (= no good). This does not mean that you need to have each property with a different lender.
Terryw
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Silly really isn’t it. But most low docs are only available for self employed. One way of proving self employment is having an ABN, hence most lenders ask for the ABN number so they can check on how long the person has been self employed.
Terryw
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If it is in NSW, send me the address and I can look it up on RP data. Otherwise go to the website of the Landtitles office and you can do a search for around $10.
Terryw
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Originally posted by Dean and Kristy:Thanks for all the feedback, especially you Steve.
I’m still a little confused as to why you just couldn’t register a ABN and run it like any business. This would be a lot cheaper than setting up a company or trust and would it be possible to claim all the renovations as expenses. Also you or your partner could become an employee of the business which would help in qualifying for finance with the banks. Am i on the right track here or have i missed something.
Thanks,
Dean
Dean
I think you have missed something,as the term ‘business’ is a bit of a misnomer. A property can only be owned by a person or a company (or a combination). ‘Business’ is not a legal entity. Registering an ABN in your own names means that you are a sole trader. ie you the individual is the business. You cannot employ yourself, even if you could it wouldn’t make any sense, as you would be paying yourself a wage, and claiming a deduction while at the same time paying tax equivalent to the deduction! Also, having an ABN doesn’t mean you can claim more deductions. It still depends on the purpose of the expenses.
Terryw
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Originally posted by Bootlace:Originally posted by Terryw:
Trusts can help cap tax at 30% as they can distribute to a company as a last resort. Company tax rate is a flat 30%.While certainly theoretically possible, wouldn’t that defeat the purpose of a trust entirely?
Although i certainly don’t profess to be an expert in this area, if someone was happy enough to be taxed at a flat rate of 30% wouldn’t they be better off as a company rather than a trust? Granted the costs of establishing a trust are minimal, but setting up a company just to be a beneficiary of a trust would seem kind of pointless….
My personal view (not advice) than unless you have limited potential suitable beneficiaries or have very high turnover, that a trust would be a considerably better option.
Hi Bootlace
What is the purpose of a Trust? One purpose is asset protection, another is tax minimisation, but the ‘official’ reason is to pass or hold assets for the benefit of a class of beneficiaries.
In a discretionary trust, the trustee has the flexibility of distributing income/capital to a wide range of beneficiaries. So normally the trustee would distribute to all the beneficiaries who would pay tax at a rate of less than 30%, then they would consider distributing to a company or individuals and paying more tax. Most trust deeds allow a company to be set up at a latter date and still qualify as a beneficiary. So with trusts you have the option.
If you had the company owning an asset, then the profits would have to be distributed in accordance with ownership of the shares – very inflexible.
Terryw
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Originally posted by ftareen:I am new to the forum, would like to know if anyone can recommend a good accountant in Sydney Hills district around Cherrybrook or Castle Hill?
A friend of mine, John Vincent accountant is in castlehill I think. He is in the whitepages.
Terryw
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Generally lenders will want to see a good history of income for casual workers. ie about 2 years. This is because the hours can vary so much.
Another option is a Low Doc or a No Doc. 70-80% LVR.
Terryw
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Sometimes it is worthwhile paying stamp duty and transferring existing properties into a trust. eg. you have a large home loan and lots of equity in an investment property. You need to do the calculation to see how many years of tax savings it will take to save the cost of the transfer.
You can get your salary into the trust by becoming a subcontractor – if your employer will let you. But the ATO have hard rules to overcome, otherwise they tax you as if your earned it anyway = Alienation of Personal Services Income.
Terryw
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