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Good points there Mike.
Yes it is possible to do it all yourself, but it may work out better by going to an accountant – especially for your first one. However, those sites have some very good information, and even if you do not intend to use them, you should register and read their material on tursts.
On going costs would depend on what sort of trustee you have, and on how many properties, shares etc the trust owns – And the quality of your accountant!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thank you for that Julia. So in summary, I think Julia is saying it could work to a certain extent as long as it was not a scheme and as long as the dominant purpose was not to increase tax deductions. But maybe Julia was referring here to capitalising interest only.
Would paying interest with an LOC (ie borrowing) be classed as capitalising interest?
Before reading Julia’s post I contacted an experiences taxation advisor (with approx 30 years in ATO). I told him about this scenario nad his comments were along the lines:
– There is nothing against borrowing to pay interest.
– even if you had cash to pay itnerest, there is nothing to stop someone borrowing to pay the interest
– it would appear to be an acceptable way to operate
– you would have a stronger case if the home loan and investment loan were with different lenders.But, he did say that to be sure, he would have to conduct further research.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
In that case, if you use a trust, all income will be able to be distributed to various beneficiaries each year at the trustee’s discretion. The class of beneficiaries is usually very wide and would include most of your relatives (even those yet to be born).
So if the trust has income, then there is no need to employ people.
A trust could employ people – like any business. But then you are up for all the rules and regulations – may need insurance, work agreements, must pay tax, superannuation etc for them.
It is probably better to just distribute $$$ to them if not running a business.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If you can actually pay cash for a property, you could then apply for finance and get it based on the value of the property. But if you are purchasing, lenders will nearly always take the lessor of valuation or contract price.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Depending on what sort of deposit you have you would probably need some sort of council approvals, plans etc drawn up.
You cuold buy the land first and then apply for further finance for the subdivision etc.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Don’t forget the Hart’s case is very different to what I have outlined above. The hart’s used a split loan, with the same lender. The loan was designed to allow interest to capitalise on the investment portion and for all payments to be placed into the home loan portion.
This scenario is different. Both loans for the investment and the LOC (doesn’t have to be a LOC-any loan will do) should probably be with different lenders. There is no real capitalising of interest. The interest for each portion would be paid each month. The investment loan would be IO and would not be increasing. However, the LOC balance will be increasing each month – with the interest for this paid each month – but not the principle.
If you have left over funds, these can be placed into your home loan or, better, into a 100% offset account against your home loan.
Any accountants out there? Coasty Mike et al – what do you think?
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes it can be done. But if you want to protect your assets don’t put them into an entity that is trading or employing people. Set up a new one. Maybe your business company/trust can have its shares owned by your property trust.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Why don’t you also send something in writing to the credit department and to the ANZ complaints section so they know why you have left.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Lets not hijack this thread. Please see:
https://www.propertyinvesting.com/forum/topic/17474.htmlTerryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by Dazzling:In terms of rates we are getting at least 0.5% better than what the best of 7 brokers could achieve (including a couple from this forum who formally advised me they couldn’t compete and recommended I stick with the Bank’s deal)…so really don’t see the need for brokers at this stage.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Dazzling, Not to be picky, but when you approached me, you didn’t give me the full details of your situation. I got you a quote which went fairly close to what you received, but possibly could have inmproved that with the additional information later received. Without going into your personal details it would be hard to say on the forum.
Now what happens when your current bank won’t lend you any more?
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
A unit trust is a fixed trust with each unit being a percentage of ownership. If one person wants out they can just sell their units. This can also be done with a company with share ownership. I beleive transfer of shares in a private company is stamp duty free if the company was incorporated in victoria (up to a certain level).
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Before you do anything, get another 2 opinions. Try a proeprty focused financial planner like Steve Navra http://www.navra.com.au
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by The Mortgage Adviser:Terry, again, this is illegal mate. You cannot deduct interest on interest to help pay off non-deductible debt.
Robert Bou-Hamdan
Mortgage AdviserRob, Why do you feel borrowing to pay investment expenses would be illegal?
By making statements like this you could scare people away from getting proper advice which could lead to thousands of dollars in savings.
Are you an accountant or lawyer? If not, have you had advice on this matter? How do you know you are correct?
BTW, keep it friendly!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
If you have other non-deductible debt, then IO is the way to go. You may not need to pay LMI, even if you borrow 100%, if you have equity. LMI and other borrowing costs are tax deductible – usually claimable over 5 years.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
They may have increased the value by $40K, but what did it cost to achieve? All the materials and tradespeople would have come close to this?
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes I’ve read that article. It would be very hard, though not impossible, to get a lender to agree to that.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Also, talk to a taxation specialist about borrowing to pay interest on your investment loans so that you can pay all available cash into your home loan or 100% offset account linked to your home loan. This will increase your deductions and speed up the payment of non-deductible debt.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I have read Kevin Young’s new book – mainly seeking more information on the living on equity angle. I must say it is a very disappointing book. There is a bit of history about Kevin Young. but not much on their strategies.
I think more information is available within their free monthly newsletters.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes your right Island Dreamer. (if you were referring to me). I am sorry!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Yes Rob.
Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
