NATS

If your sister has too much property exposure-in terms of loans, then selling half won’t really solve anything because she would still would be liable for the whole debt. ie if you were to stop paying, she would be liable.

Terryw
Discover Home Loans
North Sydney
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I don’t think there is anything wrong with having a mailbox instead of an office. Many people can work at home these days, and don’t have a need for an office if they don’t have walk in customers.

Terryw
Discover Home Loans
North Sydney
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I don’t think you can simply transfer without stamp duty. (If it was between spouses in a divorce settlement, then it may be possible).

To makes things worse, your brother may even have to pay capital gains tax as well. Maybe he should have bought it as trustee for your parents.

It may be better just to leave it as it is?

Terryw
Discover Home Loans
North Sydney
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Liberty Finance used to have a 110% and 105% loan available (on the one security), but it had many conditions and was only for high income earners as it required extra repayments in the first few years. But they have scrapped this loan now (maybe due to a perceived lack of growth in commong years).

There are still 100% loans available, but unlikely for a a block of flats.

How many units in the block? if it is 4 to 6 or less, then you may be able to get away with a ‘normal’ loan, any more and it was probably be classed as commerical.

Also location may be a limiting factor, if in the country, for example, the LVR may be lower.

If you could get 80% LVR, you would need $120,000 deposit plus costs. If you have $140,000 equity available you are nearly there. Also, how did you calculate your equity? Did you leave a buffer, as you could only borrow up to 90% of the value. And are you sure about your values? The 2 properties may be worth more than you thought.

So you are nearly there? Do some more negotiations, ask the vendor to leave some money in the deal for example.

Terryw
Discover Home Loans
North Sydney
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Credit cards can be very good or very bad, depending on how you use them.

It is a good idea to have access to a card with a large limit for emergencies. I know someone that made some miscalculations with her home loan and was about $10,000 short only days before settlement. She used a credit card for this shortfall. Standard rates for short term money lends are about 6% per month, so 17% for a credit card isn’t too bad.

But beware, credit cards will decrease your borrowing capacity as lenders take into account the card limit whether you pay it off fully every month or not.

Terryw
Discover Home Loans
North Sydney
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You could just use something like a price of $240,000 (ie 20% markup) reducing to $1 over 25 years. Part of each weeks rent could go to reducing the strike price.

The way I see it, you have three choices with lease options

1) a Strike price higher than your purchase price that reduces over time.
eg $240,000 reducing to $1 over 25 years

2) a static price that for the period of the option.
eg $240,000. that remains the same until they exercise the option

3) a strike price that actually increases in line with the market.
eg. 20% discount on market value when they want to cash you out wiht a minimum strike price of $240,000. OR give them 50% of any capital appreciation off their purchase price. eg Original price was $200,00, in 5 years time they want to excercise their option and it is worth $280,000. they get a $40,000 discount and get if for $240,000.

Number 1 is just like an installment contract and benefits the tenant most. Number 3 is the best for you, the option seller, but the tenant also benefits as well.

Terryw
Discover Home Loans
North Sydney
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Hi Shaunwalker said

quote:

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You must remember though that they are not 100% tax deductable but a percentage of it is ie the GST on the books/courses are.

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What do you mean there Shaun? I beleive that 100% of the costs should be deductible. (if it relates to your current investments, that is)

Terryw
Discover Home Loans
North Sydney
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Spawn

I think deductibility is determined by the purpose at the time of the deduction. Eg you could buy a property, live in it, move out and then claim interest and other costs indefinetly if the property remained a rental proeprty.

I think you are thinking about the 6 year rule, which means you can rent your PPOR for up to 6 years, without it being liable to CGT if sold within that period.

Terryw
Discover Home Loans
North Sydney
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Some of my clients have done this, and it has worked well in the past because of the high growth in recent years, but I agree that it would be very risky to consider this strategy now.

Basically all you have to do is find another buyer, and arrange a simulataneous settlement. So you do have to settle, but you immediately settle with the person that is buying from you. So you do not need finance. It can be hard to arrange sometimes as not everything always goes smoothly.

Terryw
Discover Home Loans
North Sydney
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Firstly, you probably should not be investing in property using a company structure unless the company is trustee of a trust. SO check this witha good accountant.

If you do decide to use a company, it might also be wise to set up a new one. If the current company is a trading company, it could be the tartget of litigation (eg sued for a business related matter), this would put your properties at risk.

And if you are using a company to borrow, then you can use as little as 5% deposits. It is not really any different to borrowing in your own name as the directors must guarrantee the loan.

Terryw
Discover Home Loans
North Sydney
[email protected]