Jaffa

Get Dale’s book. It is written in a very easy to understand manner.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

If you are just wanting to increase an existing loan, you must go through the lender. If you order your own valuation, it is unlikely to be accepted. If they do accept that valuer, it may still have to be reassigned = another fee.

Can you tell us who the lender is?

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

Well, it is whatever you feel comfortable with, keeping in mind you may have to explain your reasoning to the ATO if challenged. Technicially speaking it would probably be the taxable income, after expenses, but before tax. ie the figure that would show on your ATO notice of assessment. If the gain was made to a trust, then the Low Doc figure should only include the trust income distributed to yourself. Its a it of a grey area when it comes down to it.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

I think it may be possible as there is a double taxation agreement. But with the low intreest rates there, and higher depsoits required and the higher rental yields, would your property be negatively geared?

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

There is a lot of misunderstandings regarding trusts.

A trust can be setup in a matter of 10min on the internet from very good law firms. Most solicitors do not draw up your deeds themselves, but simply purchase a deed from one of the companies specialising in trust set ups. What the solicitor can do is to give advice on the way it needs to be set up, such as who should be the appointor, trustee and so on.

Once the trust has been set up, it needs to be stamped by the office of state revenue – govt taxes – in mosts states, except QLD apparently. There is stamp duty payable, and this varies from state to state and depending on the settled sum. In NSW, stamp duty would be $200 and up, in WA it is only $10, and nothing in QLD.

Costs of setting up a trust varies from about $130 on the net to $1000 with most accountants, and up around $10,000 for one prepared by your barrister.

Trusts have may advantages, but two disadvantages are:
1) No Land Tax free threshold – so you end up paying a bit more
2) Losses cannot be distributed.

There are many different types of trusts and a way around 2) above is to set up a hybrid trust, which will allow an idividual to claim the interest on the loan and offset their personal tax.

As for loans, it is not much different than getting a loan in your own name. Lenders will require the individual to prove their own income for serviceability and trustees will be required to give personal guarrantees.

I have written a series of general articles in my newsletters about trusts. Send me an email if you want a copy.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

Its not the sort of thing you can write a book about. What do you want to know – With a No Doc basically you can borrow 70 to 80% of the value of a proeprty without showing an income or assets/liabilities. There is no serviceability test.

With a Low Doc, then lender requires an income to be listed, as well as your other assets and liabilities. Your declared income must be enough to cover all expenses (in the eyes of the lender), but there is no checking or verification of your income – so most people exagerate it to qualify.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

I don’t think you should ever buy an asset in anything but a trust – one exception is your main residence because of the CGT exemption.

A trust is better than a company as it has more flexibility with distribution of income and asset protection.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.

I had a look at Centrelink’s policies a while back for my grandfather. It seems they will count trust assets as being your own if you control a trust (or company). They define control broadly to include ebing an appointor, trustee, director of trustee etc. And receiving a distribution would possibly also fall in here.

So they have it pretty much covered.

I think there is a bit on centrelink and trusts here. http://www.taxlawyer.com.au

One possible solution is to keep the pensioners clear of trusts and to have any trust controlled by younger family members – who can then spend their money as they see fit.

Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe” in subject line.