All Topics / Legal & Accounting / Advise on re-structuring our finances

Viewing 8 posts - 1 through 8 (of 8 total)
  • Profile photo of BalaBala
    Participant
    @balaji
    Join Date: 2016
    Post Count: 5

    Hi All,

    I am just starting out in the property investment arena after being inspired by Steve’s book(0-130 in 3.5 yrs). To begin with, I am thinking of restructuring my personal lifestyle home before I setup a family trust.

    I bought a townhouse for 680K that got settled in January 2016, 10% deposit arrangement. The property was valued at 730K during settlement, with current LTV at 83.86% (it was 84.52% during settlement). According to the bank, there is some room to top up, but I haven’t availed it yet. Currently there is only my name on the title. Following are the things I am grappling with:

    1. Can I include my wife’s name in the title now and make it jointly owned? I guess the answer is yes, though there could be some cost involved.
    2. Assuming the answer to 1 is yes, will I be able to transfer the loan to my wife with me as her guarantor? She has just begun a career and her salary is at this moment nowhere near sufficient to service the loan, but I read in Steve’s book that banks might still lend upto 80% if I can use my income as guarantee. Does this apply to living-in home loans as well or does it happen only in case of investment properties/trust scenario? The idea is to shift my position from a loan payer to a guarantor which would place me better once I set up the trust and would clear the way for me to act as a guarantor for loans sought by my trust company, eventually ensuring ongoing borrowing ability for my trust company.
    3. In case both 1 & 2 are not doable, what will happen if I go ahead and setup the trust anyway? To what extent will I be able to guarantee loans taken by my trust if the current scenario stays as-is?

    Any feedback/advise is much appreciated.

    Thanks
    Bala

    • This topic was modified 4 years ago by Profile photo of Bala Bala.
    • This topic was modified 4 years ago by Profile photo of Bala Bala.
    • This topic was modified 4 years ago by Profile photo of Bala Bala.
    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    You can add your wife to the title, however this can trigger a stamp duty event so you would want to ensure you get advice on this – you don’t want to be up for a surprise of 20k+ bill. The same deal goes for moving property into a trust, you may be liable for paying stamp duty all over again on the property.

    In terms of lending you can add spouses to a loan without having them on the title, you can also use spousals guarantees. This is normal in day to day lending, no special structuring required.

    Corey Batt | Precision Funding
    http://www.precisionfunding.com.au
    Email Me | Phone Me

    Investment Focused Finance Strategist - servicing Australia-wide

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

    1. You would need to transfer title. Which state is the property in?
    2. If you want the interest to be deductible, which you probably would, you wife would actually have to purchase part of the property from you and to borrow to do so. Just adding her to the loan will result in losing deductibility. You could have all the loan in her name with you as guarantor – but what is the point of doing this? She could only claim the interest on her share of the ownership of the property and you couldn’t claim any.
    3. If a trustee purchases the property it can get a loan and you can guarantee this loan if you are a director of the trustee.

    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 BalaBala
    Participant
    @balaji
    Join Date: 2016
    Post Count: 5

    Thanks much Corey and Terry for taking time to respond!

    Also, can overseas family members be included as beneficiaries in a trust? In such a case, if any part of profit earned in Australia is passed on to them (into their overseas bank account), would Australian income tax laws apply? Or would it be taxed at their home country?

    Thanks
    Bala

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

    Yes they can. But there are various tax consequences including stamp duty and possibly land tax. They will be subject to Australian tax laws as well as the tax laws of their country of residence.

    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 KaviKavi
    Participant
    @kavi
    Join Date: 2014
    Post Count: 18

    Hi Corey/Terry- Is CBA allow to add spouse to the loan without them on the Title or to be a guarantor. thanks

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

    Yes, CBA will

    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 KaviKavi
    Participant
    @kavi
    Join Date: 2014
    Post Count: 18
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