Calvin

You post has confused me a bit!

let me try to explain.

When the trust buys a property, the name on the title is the trustee’s name. If you are the trustee, it is your name. If a company is trustee, it is the company. Its the same whether a hybrid or discretionary trust etc.

With a Hybrid, you then apply to the bank for a loan, but you ask for the loan to be in the unit holder’s name. This may be or may not be the trustee – it depends how you have structure it.

If you, the unit holder, are the trustee, then no problems as everything is in the same name. ie the loan, and the title deed.

If a company is trustee, then this can confuse things a bit. This is where the title will be in the company name. ie the company owns the property as trustee. For the hybrid to work (with the losses being claimed against personal income) the unit holder has to ‘borrow’ the money to buy units in the trust. So the loan needs to be in the unit holder’s name so they can claim the deduction.

Some banks have a problem with the loan being in a different name to the title holder. This will involve third party guarrantees. ie someone not directly involved giving a guarrantee. The unit holder is usually director of the company and will be giving guarrantee’s anyway, so it is not such a major thing – to many banks anyway.

The banks will not necessarily even know about the funds being lent to buy units. To them they are lending funds to buy the property. The buying of the units will be documented in trustee minuites etc. The bank will be happy as they still get the same result, a mortgage over your property.

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

Apparently the ATO doens’t consider ‘boarders’ paying money to be income. (According to the 2004 Taxpayers guide, and a friend who rang the ATO). You culd possibly declare the income and then claim other expenses such as interest etc, but then you would have CGT problems.

I have had exchange students in my place in Sydney, and charge them $250 per week. This seems to be the going rate in Sydney.

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

Have a look at http://www.chrisbatten.com.au
If may be hard to do.

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

Are you sure you are doing the right thing? Selling a property will cost you as you know. This is money down the drain. then when you buy again, there is more stamp duty etc to pay.

I am concerned that a number of people are reading Steve’s books and then thinking they have done ‘it’ incorrectly. They sell their property in good locations and then buy inferior property just because it has a higher rental yield.

Think carefully before you rush into anything.

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

Intro rates are often followed by high deferred establishment fees in the first 5 years or so.

The answer would depend on how long you intend to stay with the lender. And just remember, things change so you may want to move sooner than expected.

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

have a look at http://www.lawcentral.com.au they have an agreement available there for people buying property together. You can register for free and get access to all of the tips.

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

Just ask you accountant to draw up a loan agreement.

For the lease, you just need to purchase one for about $25 and get them to sign it. You might like to get a letter from an agent confirming market rent – this will prove you are not under charging relatives.

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

Just ask them to lend you the deposit. It is called Vendor financing. You work out an agreement, eg you pay interest only at 12% for $50,000 over a 5 year term. Then leave it up to your solicitor.

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

Thanks OSS.

I was thinking of doing a Dip Fin Planning and was looking at Tribecca. thanks for the info.

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

OSS

Thanks for your detailed reply. These are certainly worth looking at.

May I ask you about your financial planning course? Where are you studying and what you think about it?

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