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  • Profile photo of wan0151wan0151
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    @wan0151
    Join Date: 2019
    Post Count: 0

    Hey everyone,

    If I earn $150k a year, have a $300k mortgage and I purchase an investment property for $500k which gives around $2000 a month in rent, do the banks consider my annual income as $174k? Would they also count any depreciation claimed on the property and any tax claims on the tax deductible investment loan towards my annual salary? If so, it would be possible to keep purchasing property year after year for a similar price.

    • This topic was modified 1 year, 5 months ago by Profile photo of wan0151 wan0151.
    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    do the banks consider my annual income as $524k

    Not really. They will have a complex calculator which takes into account a percentage of your salary income and generally 70% to 80% of the rent.

     

    Would they also count any depreciation claimed on the property and any tax claims on the tax deductible investment loan towards my annual salary?

    These days I don’t think any will take into account depreciation, but some will take into account interest being deductible.

     

    If so, it would be possible to keep purchasing property year after year for a similar price.

    You coudn’t keep borrowing to buy similar properties because you would soon hit your serviceability limit.. But there are ways to extend it

    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 wan0151wan0151
    Participant
    @wan0151
    Join Date: 2019
    Post Count: 0

    Hey Terry,

    Thanks for the information. In regard to your last point, what would be the possible ways of extending it?

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

    There are hundreds of ways to improve serviceability. You should speak to a broker aboutt specific things that might work for you.

    One simple one is to go PI on all loans and extend back to 30 year terms.

    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 wan0151wan0151
    Participant
    @wan0151
    Join Date: 2019
    Post Count: 0

    Won’t that drastically increase the monthly repayments though?

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

    Won’t that drastically increase the monthly repayments though?

    Yes

    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

Viewing 6 posts - 1 through 6 (of 6 total)

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