Forum Replies Created

Viewing 20 posts - 121 through 140 (of 16,310 total)
  • Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Cross Collateralising refers to using 2 or more properties as security for 1 loan.

    Portfolio packages don’t necessarily involve crossing security but it will depend on how it is set up.

    There is one well known ‘promoter’ that encourages the use of the St G Portfolio product which is just a big LOC

    They way they suggest is terrible and involves crossing securities.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes as if separate titles you could finance them with different lenders.

    and it will depend on how many units.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    someone would generally need an AFSL or be an authorised rep to advise. Best to see a financial planner.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    -When you own a company or control a discretionary trust the lenders will generally take your income and the company’s income into account. It won’t matter too much whehter the income is $100,000 in the company and $0 in your name or $50,000 each. It all adds up to the same. With trusts it can vary from lender to lender. Some will refuse to take the trust income into account if it is not being received by the applicant, even if the applicant controls the trust. Others are more flexible

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Keep in mind it won’t likely be one structure, but multiple legal entities and trusts together with individual ownership

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes this is common. But you might have a few tax issues if you are artificially diverting income to a company.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    In the past I have actually asked the bank and they confirmed it was a trust account.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I agree that doesn’t pass the sniff test!

     

    I am a lawyer specialising in structuring too and have never heard of such a thing!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I would have thought the mortgagee would have served papers of the tenant to get them out.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Trust account?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I would suggest legal advice as well, especially if you won’t be an owner as lots of issues to consider, especially around estate planning.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Look at keeping the penrith property and borrowing against it to invest. If you think property is a good investment consider something you can add value to. You can to get high growth if possible. Buy and hold just takes too long.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Your plan doesn’t sound too appealing to me. Where would you live?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Yes it is possible for both spouses to be on the loan but one on title. It is not easy these days because of a change in the Code of Banking practice 2 years ago, but it is still possible. Easier for investment properties though.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    First thing to do would be to work out if you qualify for finance – which appears it might be difficult to do.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    e) You may not be able to borrow in the future

    keeping the cash in the offset accounts saves you interest but also makes that cash available for future investments too. If you paid a loan down and could not borrow any more you won’t be able to invest like you could if you hadn’t paid the loan down.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I guess the down sides are:

    a) Tax – what if you need the money to buy a kidney or fly around the world?

    You might be able to borrow, but the interest won’t be deductible.

    b) risk

    What if the worst happens, and you have a cash flow crisis?

    c) retirement

    Retirement could be delayed if your rents are not enough

     

    d) Helping kids

    What if you wanted to help one of your kids into a house – you could interest free lend them and claim the interest on your investment loans giving you great deductions and save you tax while helping them.

     

    etc

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    whats your cash flow now? Other than from work – its it actually negative?

     

    Is that home loan all non-deductible?

     

    could you move into an IP?

    could you sell one IP, minimise CGT, keep the loan open and recycle the loan into a new investment while using the proceeds of the sale to pay off the non-deductible home loan – without closing it?

    • This reply was modified 3 years, 2 months ago by Profile photo of Terryw Terryw.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    To exercise an example that may be more relevant to someone who wants to start off in buying property using company trustee trust structure. Say if the sole company director (so sole guarantor in this case) has 10 properties, and he only puts 2 properties as assets for the guarantees. In the event of company bankrupt, does it mean creditor can only chase the guaranteed 2 assets, or can creditors reach as far as the other 8 assets since they are owned by the guarantor of the company being sued?

    I think you are misunderstanding the guarantee here. There are 2 types of guarantees

    a) security guarantee where property A is used as security for a loan to buy property B.

    b) income guarantees where a person’s income is taken into account for a loan with someone else as the borrower.

    Here we are talking about income guarantees. A brand new company will not have any income of its own so the lender will rely on the director to pay its loans for serviceability reasons. If for whatever reason the company cannot pay its debt the lender will have a mortgage over the property owned by the company. This enables them to take possession of the property and sell it to recover their money. If this is not enough they will go after other assets of the company (and trust if company was acting as trustee) and/or the assets of the guarantor – they will ask the guarantor to repay the loan first though.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Is it simply a matter of “don’t try to run before you’ve learned to walk”. Where does the would-be investor start? How do they get their first Trust operating? Is it only with a personal guarantee from them initially? And then, how do they get the next one? Is it by proving their worth over time? What say you Terry?

    I think you have confused things a bit Benny

    A trust is not a legal entity, it is just a relationship. But for tax purposes a trust is treated as a separate entity.

    So when a company borrows as trustee to buy real estate, it will be the trust the claims the interest and receives the income. The company is only the legal owner and the legal borrower – but it will have a nil tax return.

     

    If someone wants to maximise borrowing capacity, for themselves and related entities they would generally want to

    a) use a corporate trustee as the borrower, or a company in its own right as the borrower.

    b) carefully consider who should be the director as this will determine who the guarantor will be in most cases. Guarantees are unavoidable

    c) work with a broker to avoid using certain lenders right up front.

    d) once borrowing cap reached, then set up a new company to either act in its own right or as trustee for a different trust

    e) repeat.

     

    But there is a lot more to it. Legal advice is needed on the legal issues such as whether to use a trust or a company to hold property as there are different tax, estate planning, asset protection and land tax issues. Consider the risks of guarantees and who should be the guarantor.

    Consider how equity will be borrowed against – Company A cannot generally borrow against Company B’s properties. Banks won’t want to lend to Company A if Company B will be using the money either.

    And I should also point out that I am not disagreeing with Steve on this either. I don’t see how what I have written conflicts with what is in his book – but I haven’t had a relook at it for several years.

    I am a lawyer specialising in trusts and structuring and have 2 masters degrees, and am also a chartered tax advisor CTA, and a mortgage broker with a credit licence too. I have owned a few properties in my time too.

     

     

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 20 posts - 121 through 140 (of 16,310 total)