All Topics / Finance / how to maximise available cash

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  • Profile photo of TokenFunderTokenFunder
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    “stacking” (as it is so gently described) is fraud, plain and simple. [angry2] No need to wonder about what legislation precludes it. Just look up “obtaining a financial advantage by deception” in your jurisdiction and check out how much time you can spend discussing the merits of the decision with your cell mate.

    BTW, the funder will have sold you up well before then so at least you won’t have to wonder about who is looking after the place in your absence.

    Profile photo of kendo5181kendo5181
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    CASHFLOW IS KING!!

    Profile photo of munjymunjy
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    I’ve heard of stacking also as “jacking the contract”. It is fraud absolutely and I’ve never used it but have heard of its use.

    Especially good for people who want to get 100%+ finance. The vendor doesn’t really get anything out of this and unless it’s his PPOR, will have an increased CGT bill. Also, the REA will get a bigger cut! When you come to selling, there is also less CGT!!!! Big advantage

    If you don’t have a deposit and don’t want to be a wrappee, stacking is an (illegal- but I’m no lawyer) alternative.

    What makes me wonder, is how do you get the redemption following the settlement? Terry?

    Munjy

    Profile photo of Robbie BRobbie B
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    I think Terry is staying away from this one now. I have been awaiting responses to many questions about this (what I consider to be) totally illegal and fraudulent practice.

    TMA


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    Profile photo of TerrywTerryw
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    Stacking the contract to get more finance may be fraud. Avoid this. Stacking the contract and paying cash for the property isn’t.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Robbie BRobbie B
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    I thought the second step involved obtaining finance from a lender based on the recent ‘stacked’ contract???

    TMA


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    Profile photo of Robbie BRobbie B
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    Originally posted by Terryw:

    Nine

    One possiblitiy is to lend your money to your trust and then to buy a property for cash. Buy only bargins and Stack the contract up higher with a rebate on settlement.

    Then after settlement apply for a loan to release your funds. If you have purchased well, the valuation should come up higher and you may be able to get a loan close to 100% of what you paid for.

    Repeat the process.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Originally posted by Terryw:

    Stacking the contract to get more finance may be fraud. Avoid this. Stacking the contract and paying cash for the property isn’t.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

    Sounds like fraud to me!

    TMA


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    Profile photo of hellmanhellman
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    1. All right say you pay cash and stack the contract. Considering you are haven’t doing anything illegal – how can it be fraud?

    2. You goto the bank and get finance. The bank goes a long and orders a Valuation. Now the valuer will look at what you paid, but they will also look at what other people have paid for the property. Now the bank could come back and say, you’ve paid to high so we will lend on Valuation.

    So where have you defrauded anyone?

    If the bank do their job properly (like, perhaps order a valuation) then there is nothing to worry about. And as a side note if they don’t – it’s not up to me to tell them how to run their business (and considering they make many Billions each yr, I think they know their business pretty well… probably better than most people on this forum, including me…).

    Hellman

    Profile photo of Robbie BRobbie B
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    So Hellman, please tell me the point of the whole exercise if not an attempt to defraud???

    TMA


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    Profile photo of munjymunjy
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    Let’s see if I get this right.

    You pay cash outright for the property. The contract is stacked say $100,000. This will mean that down the track, you will pay less CGT (only if its an IP). CGT will be approx $24,500. The increased REA fee??? The pay off for the vendor to agree to this???

    You try to finance using the equity in the property, but only get market value, so still only access 80% of value.

    In the end, you save only on the CGT- if there’s much left in it for you. Even less of a reason to try it. Surely the ATO wouldn’t like this at all.

    Still don’t see how you can assure yourself of a rebate from the vendor. Write up another contract on condition of the first that he’ll buy something off you for $100,000? As if that won’t look suspicious.

    Definitely not suggesting people contemplate this, but if you’re going to do it, may as well go the whole way. What’s one more lie?

    Munjy

    Profile photo of TerrywTerryw
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    Munjy

    CGT would be payable on what you paid for the property, including any rebates. Stacking the contract would not be required, but may be helpful in getting a higher valuation.

    I have a client who pays cash for his proeprties without stacking and he received a valuation 20% higher than purchase price.

    Thanks hellman

    TMA, Thanks.

    Terryw
    Discover Home Loans
    North Sydney
    [email protected]

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of Robbie BRobbie B
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    @robbie-b
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    Originally posted by Terryw:

    CGT would be payable on what you paid for the property, including any rebates. Stacking the contract would not be required, but may be helpful in getting a higher valuation.

    How is this helpful? Are you going to tell the new lender that you ‘stacked’ the contract in an attempt to get a higher valuation? It is ludicrous!

    I have a client who pays cash for his proeprties without stacking and he received a valuation 20% higher than purchase price.

    And nearly every broker has clients who get a loan for a property at an agreed purchase price that values higher than the contract. This is certainly not the norm and has nothing to do with paying cash or ‘stacking’ a contract. It is just buying well (and maybe a little luck).

    TMA, Thanks.

    No problem. :)

    TMA


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    Profile photo of Richard TaylorRichard Taylor
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    Havent we been over this over and over again.

    Stacking, jacking, rebating, uping are all flash names for something which is out and out fraud.

    Munjy last time i check you could negotiate Real Estate commission but CGT you couldn’t. Inless of course you and Michael Carmody are on drinking terms

    Cheers Richard
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    Profile photo of munjymunjy
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    Richard,

    Yeah, Mike comes over now and then. He’s a bit boring thou *yawm*

    But I just meant that when you stack, the contract price is higher. So when you come to selling, the CG on paper looks lower.

    And you’re right, I think this topic has been flogged long enough.

    Profile photo of Robbie BRobbie B
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    I like looking deeper into topics.

    Just on the capital gains issue, that is also fraud against the ATO. Any half decent auditor would find the ‘rebate’ following a purchase on a ‘stacked’ contract and start asking questions.

    Is it really worth the risk?

    TMA


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    Profile photo of Mick INCMick INC
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    OK, OK

    How about this?
    I purchase an IP for $200,000 which has a market value of $250,00 and I pay cash for it.

    Then I apply for loan thru bank. They do a valuation and it comes back with a market val of $250,00. I borrow 200,000 and recoup my cash. Now no cash in deal. YAY – tea and biscuits for all.

    I think maybe this is what terryw was getting at!

    Mick

    Profile photo of Richard TaylorRichard Taylor
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    On the basis that the original purchase price was registered and available for the Bank valuer to check on (even if a copy of the original purchase contract was offered to them) i cannot see any problem with this at all.

    Cheers Richard
    [email protected]
    http://www.yourstatefinance.com

    IP funding and US property finance
    our speciality

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

Viewing 17 posts - 21 through 37 (of 37 total)

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