check out http://www.strategicwealth.com.au/ for an accountant based in Sydney who is a trust expert.

Search the forum for more info on trusts. Its seems this topic comes up almost daily.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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You should be able to get a loan on the current value, even if higher than contract price. Hopefully it hasn’t dropped in value.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

And if you have to sell, it may be best to look at selling the one with the lowest potential capital gains tax – as long as this doesn’t leave you short.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Just imagine you had purchased a house in Sydney in 1970 for $20,000. You used an interst only loan of $16,000. If you kept rolling over your IO loan, then you would still owe $16,000. However compared to the current value of about $700,000 this is insignificant. In fact one year’s rent would probably be more than the amount owing.

By using an IO it reduced your repayments and you were able to buy 2 instead of one. You would be looking at about $1.3million in capital growth and equity.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

If they ATO thinks you are doing it as a business, then technically you would have to pay CGT on the first house!

But realistically you should be able to do a few, and if picked up could always argue your case – had to move due to bad neighbours, work, changing family circumstances etc.

But why sell? Why not keep?

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
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It differs between banks and even within banks. SOme do not do checks at all, others ring a portion of employers to check.

Generally it is done first up, but you never know. If I was her, I would not hand in my notice until I get full approval in writing.

Which bank is she with?

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Hi Pinny

I am not sure selling is the right thing to do. If you are only going to buy more property to replace the one you have sold, then you must factor in all selling costs such as agents fees, legals, NSW exit tax, CGT etc and then when you buy again you have loan costs, stamp duty, stamp duty on mortgage, legals etc.
It seems you think your property is going to keep dropping in value. It may or may not, in the short term, but if it is in a good area, long term it should be back to good growth. But no one knows how long this will be.

You also seem to be concerned about the yield. This these are low in major cities, but in the long run having a a high growth propety will make you much more money than a cashflow +ve property that does not grow in value.

If you want to buy more property, you could always keep the existing one and then borrow against it to buy more. Maybe cashflow property to balance out the low yield.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Some questions to ponder:
Does your current home have a mortgage?
If you sell, what ywill you do with the money?
Do you think it will drop in value further?
Is $285,000 gain in 6 years really that scary? That’s more than doubled. Imagine if you had pruchased a cashflow positive property with no capital growth instead.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Usually just a switch fee of a few hundered $$.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]

Challenge it! The values used were way too high.

Terryw
Discover Home Loans
Mortgage Broker
North Sydney
[email protected]