Hi guys, I am wanting to find out some information in regards to questions I have about attaining my first home to then become an investment property, any advice would be greatly appreciated.
I am looking at getting help through equity on my parents home to use as a deposit for my first home, are there any implications in doing so or is this perfectly legal?
As this first property will be my initial purchase into real estate investing, I am under the impression that I should live in the home for 6-12 months before renting out to avoid stamp duty and receive any first home owner grants? If this is true am I legally allowed to have other people live in the home at the same time and receive rent from them to assist with repayments?
Would I be eligible for waiving stamp duty if I purchase my first home under a business or trust?
If I went into the first property 50/50 with another person then would these benefits be forfeited if they weren't a defacto?
Sorry for all the questions and if you have the time to answer any of them I would be very appreciative.
Yours in property,
Matt.
Hi Matt,
Yes you can use the equity in your parents house – there is 2 different ways to do this that will give you the same outcome (i.e. the equity).
Yes you will need to live in the property first to be living the property first. It also depends on the state and the type of grant. There is a grant in NSW that is designed for investors and new homes.
TheFinanceShop | Elite Property Finance
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Hi Matt
Regretfully the Stamp Duty concession is not available if you purchase in Trust or Company structure only if you purchase in your own personal name and the purchase price is < 500K.
Secondly probably realised that the FHOG ended in Qld on the 11th October and was replaced by the FHOGC which is on new homes only.
In regards to using your parents property as collateral most lenders will trying and encourage you to use the family guarantee style loan however i would personally suggest this is not the way to go for either you or your parents.
There is an alternative which is more flexible whilst still maintaining the tax benefits of future investment.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Matt,
FHOCG is now only available for off the plan or newly built homes. And you would need to live in the home for a period of 6 months within the first 12 months of ownership. If you go 50/50 with someone else then only one of you may claim the grant, and if the other person has owned all or part of a place before than you wont get the grant. I'm not entirely sure about living in it and renting out rooms, but I think it should be okay as long as you are living there. (might have to research that one further)
Also another benefit of living in the home after purchase is that you can claim it as your PPOR for tax purposes for a further 6 years. What this means is that if you don't have another PPOR, then after 6 years you can get your house revalued and not have to pay CGT on the rise in value.
I also used my parents property as security for my first real estate purchase, the only problem with it was that my parents had to wait for me to build 20% equity to release their property before they could secure finance for renovations. I'm not sure what the alternative is that Richard mentions but he knows far more about finance than I ever will.
You should also get some advice on how to structure your loan correctly.
Regards,
Cubez
There are heaps of legal issues with using your parents equity. Most people dont consider but wjat woulf happen if either or both parties:
Died
Divorced
Went bankrupt
On centrelink benefits
EtcTerryw | 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
Thank you all to the answers, they are indeed very helpful.
So I believe the first step would be to get an evaluation on my parents property and find out available equity?
Also Terryw, with your points would you then recommend that I consult a solicitor with property experience to create some legal, binding documents before purchasing a property?
Regards.
CBA have a good family equity loan which has three variations and is worth considering once you fetch to looking a finance.
Dan i have to say i would think for what Matt is trying to achieve CBA would be one of the last lenders i would approach as their equity release product is antiquated in comparison to what else in the market.
Matt, hope everything is well. Yes definately as we discussed suggest you have a Solicitor draw up a legal document to provide your mother in law with additional comfort.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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