All Topics / Finance / Struturing Help on IP and PPOR

Viewing 9 posts - 1 through 9 (of 9 total)
  • Profile photo of digitalmbsdigitalmbs
    Participant
    @digitalmbs
    Join Date: 2007
    Post Count: 17

    Hi All,

    I am newbie in this business. Here is my current situation :

    1) PPOR Loan Balance $190K and current value of property – $230K. ( brought 4 years ago and house is 6yrs old). (paying $750/fornight as P&I) and titled & borrowed on my name alone. Variable rate

    2) Vacant Land brought last year – Loan Balance $126K and value $140K. Paying $500/fornight as P&I. and titled & borrowed on my name alone. variable rate.

    Both loan are seperate and house is security for house and land is security for land.

    3) My Income – $95K ($5000/month take home after tax and hecs) + spouse $2000 take home after tax.

    Now, we have decided to build house on vacant land, we are thinking 2 options (not decided yet)
    A) Build single PPOR (big house) and change current PPOR to investment ( it is small only 3 bedroom).
    or
    B) Build 2 double storey house on land and 1 will become PPOR and other one either sell or rent i.e. IP and current PPOR will change to IP. Land is 19.2 front and 36.2 deep.

    Now, my question are

    1) What is the best way to structure loans for maximum tax benefit? is current structure good, please?

    2) How do we asset protect? I mean do we need trust or something if so then who should I talk to? Is there any good accountant or lawyer? and recomendation please?

    3)Is it good idea to build 2 houses on land? what cost are involved and who should i approach for more information i.e. arhictect etc, please?

    thank,
    DM.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Before we go down the structuring avenue:

    1) Switch the P & I repayments on your loan to interest only and if you want to increase the repayments on your PPOR by the savings.

    2) See if you current lender has a 100% offset account linked to your home loan. If so have all of your income now and future into this account and have the interest only repayments coming from this accounts.

    If you are paying variable rate you should be able to do better with this. Who is the current lender ?

    You are too late to change the title of the land from your name to a Trust name without triggering a possible stamp duty and CGT issue. Still maybe viable but consideration needed before jumping in.

    More information needed to give a qualified answer.

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

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of digitalmbsdigitalmbs
    Participant
    @digitalmbs
    Join Date: 2007
    Post Count: 17
    Qlds007 wrote:
    Before we go down the structuring avenue:

    1) Switch the P & I repayments on your loan to interest only and if you want to increase the repayments on your PPOR by the savings.

    2) See if you current lender has a 100% offset account linked to your home loan. If so have all of your income now and future into this account and have the interest only repayments coming from this accounts.

    If you are paying variable rate you should be able to do better with this. Who is the current lender ?

    You are too late to change the title of the land from your name to a Trust name without triggering a possible stamp duty and CGT issue. Still maybe viable but consideration needed before jumping in.

    More information needed to give a qualified answer.

    Thank your Richard,

    to answer your question, current lender is CBA

    thanks,
    DM

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Ok the Big C sorry i should have guessed.

    Not the world friendliest organisation after they get you through the door and will certainly make you jump through 101 hoops before saying NO.

    Still should be able to accomadate the suggestions i made initially.

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

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    If you already own the land, then transferring to a trust could incur stamp duty again as well as possible CGT and legals fees etc.

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

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of digitalmbsdigitalmbs
    Participant
    @digitalmbs
    Join Date: 2007
    Post Count: 17
    Terryw wrote:
    If you already own the land, then transferring to a trust could incur stamp duty again as well as possible CGT and legals fees etc.

    Thanks Terry,

    What if I donate it to trust for free?
    Who should I talk to setup trust and mortgage for best tax efficiency and asset protection? accountant or lawyer or tax agent or financial planner? is there all-in-one profession for this sort of things, or else if you guys can recommend firm where I can go to. I am happy to invest in good advice because I am thinking to buy IP instead on building on current vacant land.

    thank you for all your information.

    regards,
    DM.

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    DM

    Still will incur stamp duty on market value and the same goes with the CGT trigger.

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

    0-40 Properties in a decade with an unencumbered value of over $35M. Email for a copy of my API article

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I would suggest you see a good accountant to set up a trust and discuss these sorts of issues.

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

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of dosqdosq
    Member
    @dosq
    Join Date: 2007
    Post Count: 12

    I have almost same problem. I am now stationed overseas where my PPOR is overseas. I am repaying P+I. My 1st IP in Melbourne also repay P + I. I have another IP also in Melbourne coming to settle. I am considering P+I or I only. Need advise here.

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