Hi,
We want to start property investing but the problem is our PPR is in our personal names, greatly reducing our borrowing capacity to purchase an investment property.
I am going to see an accountant about our options. However I just wanted to clarrify in Steve's book pg 172, he mentions that you can keep leveraging off your income time and time again through using multiple trusts (and going guarantor on the loans) with multiple lenders.
Is this correct? I am new to this, and would apprectiate talking to anyone who uses this strategy to buy realestate.
So if our borrowing limit for example is $300k, we pay the deposit and arrange a loan through the trust with bank A, reaching our borrowing capacity. We can then set up a new trust, go though a different bank and leverage off our income again and purchase another property for $300k, provided we only go guarantor and have cash for the deposits required. Is this correct, we can continue to borrow time and time again?
I would appreciate any feedback on this, so I can weigh up if it's worth the cost or not of getting our PPR out of our personal names, asside from asset protection.
Thank you!!
The short answer is no – it won't improve your borrowing capacity.
Why is having a PPOR in your own names a problem?
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
I'm sure Jamie can back this up, but my personal experience has been that the banks require personal guarantees from the directors of the trustee company, which will usually result in a "hit" to your credit file and all the usual questions being asked by the banks regarding your serviceability.
That's pretty much it – so their income, assets/liabilities are taken into account just as it would if they were borrowing under personal names.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Transferring your main residence to a trust will create several problems and won't assist in increasing borrowing capacity.
You will pay stamp duty, possibly land tax and receive little in the way of asset protection. Furthermore you will lose the CGT exemption status.
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
Terryw wrote:Furthermore you will lose the CGT exemption status.Which is a massive thing to lose!
Imagine owning your PPOR for a couple of decades under the wrong structure – then selling it to find out that you have to pay a nice chunk of CGT.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Jamie M wrote:Terryw wrote:Furthermore you will lose the CGT exemption status.Which is a massive thing to lose!
Imagine owning your PPOR for a couple of decades under the wrong structure – then selling it to find out that you have to pay a nice chunk of CGT.
Cheers
Jamie
I had a client once who owned their PPOR in a company. There were parents and 4 children and all contributed to the purchase so their accountant suggested a company be set up to own the property with all 4 shareholders. Great.
But then they got hit with land tax and the CGT tax on the sale. The refused to pay the land tax so the OSR put their company into administration. They then had a hard time accepting this and getting the company back with thousands in legal fees. They then heard that there was a primary production exemption. They had on beehive but put in for the exemption with the OSR asking them about 4 pages of detailed questions on how many bees they kept and where they sold their honey etc. In the end they had to wear it all.
Accountant had died so they couldn’t have sued him.
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
Amazing what advice some so called experts provide.
Met up with a couple of forum clients earlier today in Melbourne and amazed what advice their existing Financial Planner has given them on what they can and cannot do with their SMSF.
Nothing amazes me in the current climate.
In saying this dying is a radical way of getting out of getting out of a liability claim.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Qlds007 wrote:Amazing what advice some so called experts provide.Met up with a couple of forum clients earlier today in Melbourne and amazed what advice their existing Financial Planner has given them on what they can and cannot do with their SMSF.
Nothing amazes me in the current climate.
In saying this dying is a radical way of getting out of getting out of a liability claim.
Cheers
Yours in Finance
I saved a bloke once from a financial planner – sort of. Planner recommended he sell his commercial building to his SMSF and lease it back. This was in the statement of advice prepared by the planner. Only problem the land was leasehold and he didn’t own the land. This would have been a breach of the SIS Act and his fund would have been non complying.
The fin planner critised me as being too negative.
Amazingly the guy stayed with the planner.
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
Had a forum client this week wanting to purchase a PPOR via a family trust on the advice of their fin planner due to asset protection.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Yes guys probably the same Planner that who was still recommending his clients invest in Westpoint.
I had Planners here in Brisbane tell me i was stupid not putting my clients into Macadamia farms etc.
Don't worry whether it was good or bad the commission was 30% and that was all they interested in.
Thought i was very conservative for promoting property as a balance alterrnative.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
