I would like to help my younger sister to get into the property market and we thought that purchasing an IP together might be a good way for her to ease into the market. We would go 50/50 on everything, thinking that we would halve the cost and the risk. It would be both of our first IP. The plan would be to hold onto that property for 5-7yrs. We both want to continue to acquire more IP’s in the near future, however it would likely be separately.
Is the purchase of an IP together going to help or hinder us in the future?
Any thoughts ideas and advice would be greatly appreciated.If you buy this property together and then decide in couple years, when you have your own cash or you want to buy with a partner etc they will look at the entire debt you have with your sister I believe so serviceability can be issue if your not going to continue buying property with your sister. I’m sure there are ways around it so it doesn’t hinder your serviceability.
Also are you both going to be using your FHOG. If you do you both forfeit it moving forward I believe as well.
Just couple things I could think of quickly
Depending on how you plan on working deposit and other expenses it may be worth looking at getting a property share loan. These are two seperate loans set up individually. This way down the track you are only responsible for the loan you take out over the property, and your sister would be responsible for the loan she takes out over the property.
regards
Dustin McMahon
Your Broker
0430 110 304
[email protected]Thanks alot for the advice. I had been told that the banks would always take the whole amount into account when going for future loans. I am pleased to know that there are ways around that. Thanks again.
Hi skybee,
A lot of our members/ clients have received advice in the same circumstances as you are in. They opted to set up a suitable trust structure to purchase the property through. You should seek suitable professional advice on this but I thought this would help to know. Also, as advised above, there are different finance options available through a good broker.
I was just going to suggest a trust structure too – should at least consider it.
In some states the transfer of units in a unit trust are not subject to duty. In NSW the rate of duty is currently 0.6% but it will be abolished from 01 July 2013.
That means that 2 people buying property together could purchase in a unit trust structure and when one wants out the other can buy the units and no stamp duty would be payable from 1 July next year in NSW. The legal owner of the property would be the trustee and need not change – ie no change in land title. Also if the trust is a fixed unit trust then access to the land tax free threshold could be maintained.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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