If both are on title, then both will need to be on the loan, or a loan in one name only may be possible, but the other will have to guarrantee that loan. They could for example get a St G portfolio loan with splits in different names

The net result is both are responsible for the whole loan = hurts serviceability.

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Are you saying you buy houses for cash by using your LOC? If so, then this is an excellent way. What you can do then is to get a mortgage on the property, release your money back into the LOC and to go again.

If you can buy well, and/or do quick improvements, you may be able to end up with 100% finance. eg buy for $80,000, do up, value comes in at $100,000, the bank lends you $80,000 against this = all your money back for the next one.

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Hi Mike

Can I add a question?

Would it be necessary to get the loan agreement stamped by the office of state revenue? (And pay duty?).

Thanks

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Ask them to give you power of attorney so you can sign on their behalf.

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Hi RAMK

The title would be in the name of the trustee, – trusts aren’t mentioned on title. But the trustee is only the legal owner, not the beneficial owner. If someone is sued, assets properly held in a trust are much safer as they are not the persons personal assets.

If you have a company as trustee, then this usually doesn’t or shouldn’t, hold any assets in its own right. Just in case it is sued. Directors can usually only be sued if they have done something illegal like insolvent trading etc.

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It only becomes your PPOR once you live in it. Therefore if you have rented it out before living in it, you would most likely have to pay CGT for this period.

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Giddo

I beleive that is the case in NSW too. Stamp duty may still apply on the transfer of shares (Except companies formed in VIC?), but this should be much lower.

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Cata

I meant if you owned, say Telstra, shares only. There would be no way the trustee could be sued if their capacity as trustee. However, they could be sued as an individual for other reasons.

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If you have lived in the house before renting out, then you could probably claim it as being your PPOR for the whole time. If rented first, then only could claim from the date of first living in it.

BUT (and there is always a but) you can only have one PPOR at one time. So if you were to ever sell the other house, you could not also claim that was your PPOR for the same period.

ps. I am not an accountant

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Tony,

Not sure what you mean by this.

Carl will be borrowing from his bank and lending money to his trust. The trust will pay him interest. This is income. However Carl has a cost of paying interest, and this will offset the income he receives. Net result is nil for Carl, with the trust claiming the interest.

Carl

Your strategy sounds alright by me – but I am not an accountant.

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