tom123 wrote:

Cheers, Andrew. so you don’t have to write your offer on the contract of sale?

Also if there was a scenario where i wanted a 12 month delayed settlement but there are tenants living in the property and i wanted to be able to have the rent paid to me instead of the home owner for the 12 months. how would i go about wording that?

would that just be me having equitable title on the property and the owner still having legal title?

Once exchanged you would have an equitable interest in the property.

tom123 wrote:

if you friend is getting the loan and is on the title of the property and the first 12 month he is renting it out to you to maximise the negative gearing strategy. i would have thought that at some point he would actually need to live their 6-12 months to legally prove that it is a PPOR and not a IP for capital gains exemption.

It can’t be a main residence without actually living there as the main residence..

Company title is not difficult to finance, most banks offer 80% LVR with St George going to 85%.

With that sort of equity and income you shouldnt have a problem.

But what you think is undermarket value is probably not because company title is generally worth less that strata as it is harder to finance and therefore harder to sell

One reason a company is considered is beccause of land tax in NSW. A company will get a new threshold. A developer may not get the 50% CGT discount so this may not be an issue for some people. I would generally not recommend a company but I have a few clients who already own property in a company.

Buying real property as a trustee is often a mistake, especially in NSW because of land tax. 1.6% of land value in tax per year for a property can be a killer.

e.g $400,0000 land value = Nil tax in your own name (assuming your first property) but $8000 per year in land tax every year. That is a huge difference.

Add in the fact that a trust is treat as a separate tax entity so any losses cannot be used to offer your personal income could mean another $2k to $5k pa to hold in the early years.

Setting up a cheap online trust can also cost you more, much more because of errors, wrong terms, wrong party in the wrong place etc.

This is why you need legal advice.

this doesn’t make sense! Borrow at 9% and invest at 5%?

Contracts for land need to be in writing to be enforceable. But they could probably enforce an oral lease becasue of the RTA. What about bond – any been collected and lodged with fair trading etc

Worry about insurance too.

If it is still in his name then you haven’t bought it. You may be able to create an equitable interest in the property, but would not be legal owner without title.

Don’t confuse ownership with loans. If he is on title he may or may not have a loan. If he has a loan, ie is a borrower or a guarantor then this is a liability which will be taken into account by the bank..

You could create some rights over the property but that would not change the fact that he has a loan and is the legal owner. Bank wil want to make sure he can service both mortgages

Catinthehat wrote:

<div class=”d4p-bbt-quote-title”>Terryw wrote:</div>
If they owe the money and there is no dispute they would have no choice other than to pay.

They do have a choice. The simply choose not to pay.

Talk to any business that bills on account and ask them how hard it is to get creditors to pay let alone pay on time. The bigger they are and the smaller you are generally means you as a small business or individual are on the end of the payment queue. 90 – 120 days is fairly common. Not only that the outstanding just keeps growing. They often pay less than they incur. Building/construction companies are notorious for not paying what they agree to pay or are obliged to pay.

Then it is a simple process to wind them up.

DanielJ2 wrote:

Any hints for strong set up of trust? I had intended on being the appointor and director of corporate trustee. That way, I have all the control and can alter the trustee if bankruptcy was ever declared as I could not remain director of the Pty Ltd. (I acknowledge that it is very unlikely that Bankruptcy will occur but it happens and I think it unwise to ignore the slim chance.)

Get legal advice on this. It will all depend on the structure of the trust – and watch out for stamp duty implications.