Forum Replies Created
Thanks Ishita
What was in it for Purpetual trustees? Do they set up trusts and what do they charge?
And did htey mention Hybrid Trusts?
I think Grandfathering means it won’t be retrospective. ie won’t apply for assets already owned. eg if you currently own a house and then sell it to a trust just before you go bankrupt, the courts can undo that transaction.
Terryw
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i used to work in Japan, and I know the NAB and other Aust banks will actually lend you money for property in Aust in Yen at Japanese interest rates (1 to 2%). But you must be working over in Japan earning yen. I think there are a few people using these Yen loans.
Over the past few years the exchange rate has gone from about $1=60Yen to $1=80Yen.
So if you had taken out a $100,000 loan it would have been 6,000,000 Yen which is worth $75,000 now. I suppose if you are earning Yen it doesn’t matter so much.Terryw
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I remember reading an Investors Club newsletter a few years ago where they mentioned a way to be able to legally claim costs on land. I think if it was intended to eventually be an IP. So it may be possible-check with a GOOD accountant.
Terryw
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Hwd
Sure it is legal to pay off someone else’s debt. But in Australia, you can’t assume someone else’s loan. (I think you can in America).
And it is legal to sell for undermarket value, but you must pay stamp duty and CGT at market rates-otherwise it is fraud.
And I don’t knwo about you example above, I don’t think it would make a difference in cashflow etc.
One good reason to pay off one loan and increase the other would be get completely clear the mortgage on one and get the title deeds back. it give the bank less security.
Terryw
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Tas Investor
You would think that it so, but… LMI polcies can vary between lenders. Eg GE with bank A has one policy, but GE has a different policy with bank B.Eg one building society (Widebay Capricorn) is able to offer 95% loans with no genuine savings.
I don’t know why this is the case, but suspect each bank negotiates the criteria the the LMI companies will be using with them
Terryw
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Janine
Maybe you could buy property thru your own super fund?
Terryw
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Broken Hill was the 9th fastest growing subsurb last year. (according to The Australian, June 7, 2003)
The median price in this suburb jumped from $39,000 in Dec 2002 to $52,000 in Mar 2003. A 33.33% gain.
This probably confirms Rie’s opinion that it has been discovered by out of twon investors.
Terryw
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Caz
A few years ago I sold a negatively geared property to use the proceeds for wraps. I now regret that as I would have made more money by hanging onto that property.
Once you sell a property you lose any future capital gain. Think what it will be worth in 10 years time. And think of hte costs – CGT, Real Estate agents fees, legals etc.
There are ways to get that $4000 even if you aren’t working. Since it is a small amount and you have paid your loan down a fair bit, some banks will just give you a top up without the need to show proof of income or submitting a new application. A friend of mine, not working, got a $30,000 increase from ANZ recently, all it cost was $300.
Your LVR is now around 66%. BTW if you have been offered $95,000 it is probably worth much more.
BTW, for future reference, With Low Doc loans you can go up to 80% LVR. (or 90% if you are prepared to pay 10.15%). You can self declare your income.
Terryw
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Steve
I recently was surfing another forum and there was a post recommending your Wealth Guardian product. But somehow the web address had been censored out. Even your name was censored to Steve xxxxx. Isn’t that funny?
Terryw
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I know how you feel.
If you are going to do it, plan carefully. Some banks require payslips no more than 2 months old, a letter would help (including wage, time there, stating you are full time and not on any probabtion etc). You will be getting your group certificate soon,so that should be ok. But when you fill in the application you will have to declare if you are working or not. Somebanks actually ring your employer to check.
After 6 months when you go back to work will you be going back to the same company (not if it goes good I guess). If it is the same industry, may be ok with a different employer, but if you change industry if may be harder to get a loan for 3 months or so. It would be good if you could take some sort of leave (unpaid leave?).
Good luck and let us know how you go.
Terryw
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Stuart
And we both gave the same answer!
Terryw
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They will go on the 8K. But with certain banks there are certain things you can add back such as depreciation on equipment, some interest etc. non recurring expenses may also be disregarded.
You can always go low doc. Generally around 80% LVR max.
Terryw
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TJ
I think the rule is different if you rent out part of your house while lving in it. You lose the CGT exemption completely. I think.
Terryw
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hi Stuart
I must disagree with you on this one.
Section 118.145 of the Income Tax Assessments Act 1997 (http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s118.145.html) allows you to be temporarily absent from your main residence for up to 6 years, and to still claim it as you main residence. You cannot have more than 1 main residence at the same time (except for a period of 6 months while you are in the process of moving – section 118.140).
This works well for people working overseas or for people who rent temporarily somewhere else.
So you can rent out your house and still claim a CGT exemption if you don’t have another main residence at the same time and the period is less than 6 years. The 6 years starts again if you move back intothe house.
Here is an actual example from the link above.
Example: You live in a house for 3 years. You are posted overseas for 5 years
and you rent it out during your absence. On your return you move back into it
for 2 years. You are then posted overseas again for 4 years (again renting it
out), at the end of which you sell the house.You have not treated any other dwelling as your main residence during your absences.
You may choose to continue to treat the house as your main residence during both absences because each absence is less than 6 years.
You can make this choice when preparing your income tax return for the income year in which you sold the house.
Ps Confirm this with your accountant.
Terryw
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Little Bee
Check with your accountant (I am not one), but there is a provision in the Income Tax Assesment Act that allows you to live away from your PPOR for a period of 6 years and to still claim it as your PPOR and claim a full CGT exemption.
I don’t have the section of the act handy, but can dig it up for you.
And you can move back in for a short period and hte 6 years starts again.
Terryw
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I beleive the ATO determines a purchase to occur on the exchange of contracts. Not sure about the Office of State Revenue (or whatever it is called). So this would probably be deemed a purchase and you would not be entitled to the FHOG (unless you will live in this one?).
Terryw
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Hi Fullout
You do have some equity. You could go to 95% of the value of both properties if your serviceability would allow it, and you are willing to pay LMI.
Terryw
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Boothy
You can’t increase your loan and claim the interest. But you could sell the home. So why not sell it to yourself – or an entity contrlled by yourself. And then the money you get from the sale is the proceeds of the sale of your PPOR and you can do what ever you want with it-put it into your new home etc. No capital gains tax as your PPOR is exempt. But you will be up for stamp duty About $11,600 in NSW on a $360,000 property.
If you just rented your house out as is, you would be paying lots of tax on the rent as you wouldn’t have any interest to deduct. In addition if you purchased a new PPOR then you would have a loan and would be paying interest with after tax dollars. You just have to weigh up the pros and cons.
Another option is for you to buy your spouses share of the property.
Better check with your accountant.
Terryw
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Excellent idea.
If you ever sell your new PPOR CGT will only apply for the period it was rented out.
Terryw
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Hi Boothy
Since your current home is paid off, any finance you get on this property won’t be tax deductible. It is just like inceasing your loan balance. It depends on what the funds are used for. If you get a loan on your ex PPOR and use that to buy a new PPOR, then the interest won’t be claimable. But if it is used for deposits on investment property, then it would be claimable against that property.
One possible solution is to sell you PPOR to your trust. You will be up for stamp duty, but thinking long term you will be able to save a fortune. Do some calculations.
Terryw
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