Why sell?

What about borrowing against your increased equity so you can keep your house and still buy investment properties?

Terryw
Discover Home Loans
North Sydney
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Hi Richmond,
Actually Hybrid trusts can’t really distribute losses, they work by the trustee borrowing to borrow units in the trust. This borrowing is in their personal name and so they can claim the interest against personal income. But it does work out like the trust is distributing the loss.

Terryw
Discover Home Loans
North Sydney
[email protected]

I agree that you can make a higher return in business, but you can also lose it very quick. I think it is good to make you money in business and hold your wealth in property for asset stability and good long term growth.

Terryw
Discover Home Loans
North Sydney
[email protected]

As far as I know this would be illegal in Victoria. Unless you have a written agreement for that peron to be acting on your behalf before they signed the contract, it would be fraud.

To confirm, just ring the state revenue office and ask them over the phone – without names.

I think you would be required to pay stamp duty on the value of the project at the time you sign. The person you are buying from would also have to pay stamp duty on the value at the time they signed.

However if you had a prior written agreement, then yes they may avoid stamp duty and you would save stamp duty. It would be like you were buying instead of them.

Terryw
Discover Home Loans
North Sydney
[email protected]

Hi again

It would probably be best just to pay the $300 and switch to IO. You may even be able to talk them into waiving this. This just keeping the same amount in the offset , should result in no interest payable.

Putting money in and taking it out again can have tax implications too – if it is an investment.

Terryw
Discover Home Loans
North Sydney
[email protected]

‘Different income tax structure’ is a bit vague. I wonder what he meant?

Terryw
Discover Home Loans
North Sydney
[email protected]

I think in some states, (VIC) you are required to use PI loans on installment contracts.

Terryw
Discover Home Loans
North Sydney
[email protected]

Chris

You probably shouldn’t be using a company that is trading to hold assets. What is your ACN (is that accounting?) business has trouble witha client and is sued? You could lose all properties. And I hope you are using a trust as well.

Terryw
Discover Home Loans
North Sydney
[email protected]

Jason

You have jumbled things up. If you parents have a property and withdraw funds to loan you the money, they cannot simply claim the interest because it is an investment property. The ATO looks at the purose of the redraw.

What you need to do is have a loan contract drawn up, your parents draw money and lend it to you. they charge you the same interest as they are paying on their loan. They can then claim the interest as a tax deduction, but they will also be receiving income from you in the form of interest. This should balance out on their side. ie + – = 0.

Now you are paying interest, and if you are buying an investment property, you should be able to claim this interest. If you are buying a PPOR, you probably can’t, or maybe shouldn’t.

It doens’t really matter if it is a LOC or a 100% offset, or a redraw. In the end their interest will go up when they lend you the money. If the money was in a offset account, they wouldn’t be able to pass the interest deductions over to you, but they would be able to claim the extra themselves (and you could pay for this??). If a redraw or a LOC, they can easily make the deduction pass onto yourself.

Terryw
Discover Home Loans
North Sydney
[email protected]

There are some ways to buy without a deposit.

1) 100% finance. this is hard to qualify for and is often only for owner occupiers.

2) use equity in existing property

3) stack the contract and lie to the bank.

4) go for 95% loans with LMI capitalised to minimise cash outlay.

It generally doesn’t matter how good your deal is, or how good the rental yield is, you will usually require one of the above methods.

Terryw
Discover Home Loans
North Sydney
[email protected]