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I don’t think vendor finance would help in this situation. The lender would want the personal loan out of the way probably because your brother’s income is not enough to service both loans.
If he went for vendor finance he would be borrowing more (at hgiher rates and shorter terms), so this would worsen the situation.
Terryw
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Some banks are fairly inflexible – especially ones starting with N.
Terryw
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Hmmmm. Since you already have it, you would probably lose too much by selling it. Just don’t crash it!
Terryw
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Start with family, friends (beware, you could lose the firends!), then talk to everyone you can, accountants, mortgage brokers etc. You never know where things may lead!
Terryw
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I don’t know why, but apparently this ‘loophole’ had been closed down by the ATO several years ago. Maybe the withholding taxes.
Terryw
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Shar, that is amazing!
Things must be different in NZ. In Aust all trustees would be required to guarrantee the loans!
Terryw
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You will be buying half at market rates so will pay stamp duty accordingly. Even if you pay $1, you are required to pay stamp duty at market rates. He may have to pay CGT too if this was an investment property.
Terryw
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It may be better to sell the property with no finance owing. This may give you more ‘cash’ which can be used to pay down your home loan, and then you could borrow again to invest.
What is best woulc depend on how much CGT etc you would have to pay. This would depend on how much they were purchased for and how much they had gone up.
It would be very wise to get all figures together and then spend $500 or so taking to an accountant – as this could save you thousands.
Terryw
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If you are Australian you can get various info at http://www.ato.gov.au on what you can claim etc. You can’t claim rent, but must declare it as income. Then you deduct any expenses such as rates, insurance etc. You can also claim things that don’t actually pay for each year such as travel, borrowing costs, depreciation on building and fittings etc. If the figure comes out negative, you have made a loss, and this will come off your other income, resulting in a tax refund. If it comes out positive, it means you will have to pay more tax on this portion.
Terryw
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Sounds like a good idea. Brad Sugars talks about this sort of stuff in his books.
Terryw
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If your asking how to ‘move’ equity for tax reasons, then it can’t be done.
Tax deductibility depends on purpose. If you increase the loan on the existing property so you can pay for a new PPOR, then, unfortunately, the extra interest on the increased loan won’t be claimable.
The best bet would be to change the existing loan to IO and pay the minimum off this, and any extra money go into the new loan for the new PPOR.
Terryw
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You can use a disrectionary trust to hold a -ve geared property, but cannot offset the loss against your own income.
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Unfortunately stamp duty on the mortgage is not paid by the bank, but by the borrower.
Terryw
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Smet, I may be wrong, but think that company and trust setup costs are not tax deductible.
Sqeaker, register at http://www.lawcentral.com.au and learn more about trusts by going thru the motions of setting one up – doesn’t cost anything.
Terryw
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I beleive that would be possible, check with the Office of State Revenue.
Terryw
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You’re getting the computer, but dad is claiming it? You’re only 16 – and learning fast!
Yes I have heard the same thing. You can get a double deduction. The company buys it for the employee and claims it, the employee can also claim it – depreciating it over 5 years or so. This results in getting it for nearly nothing!!! It only works for certain things which are GST exempt such as laptops and mobiles.
I think there is something about this in “trust magic”.
Terryw
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In that case, you would be able to get a loan for it easily, but both of you would have to be on the loan. Also, many loans have minimum sizes – frequently $50,000+ , but some (eg ANZ) do $20,000 loans.
Terryw
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If you don’t have a loan yet, how can you consolidate the debt? You would need a deposit to get a home loan, but I guess if you had the deposit you would have paid off the cc.
Terryw
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For a second mortgage, you would be looking at legal fees and costs for loan contracts to be drawn. There would also be stamp duty on the mortgage and other govt fees.
A lot of lenders do allow second mortgages, many don’t – I am not sure of which.
Caveats are much easier, but offer less protection.
Terryw
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Often small defaults for phones etc are disregarded if you have a good reason – forgetting is probably not a good reason!
Terryw
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