Hello,
Myself and my partner are in a fortunate position whereby her parents are happy to sell to us one of their investment properties for 400k. The property is likely to be worth somewhere in the region of 420k and 450k – a valuation will be sought soon.
I have been basing all calculations like the example below, the value is obviously an estimate used.
$430K valuation
$400k what my partners parents want.
$344 what they are happy to sell on paper to us for (80% lvr)
$20k stamp dutyWe are then fortunate to be able to pay them back 56k (400-344)with staggered payments. Are total outlay would be paying her parents this 56k plus the 20k. 76K in total.
We could actually put less capital in ourselves however if we treated it like the following.
Purchase price $400k
90% LVR – deposit of 40k
Stamp duty – 20k
LMI – capitalised onto the loan
Total outlay 60kDifference between the two options is 16k, which would go towards savings for another purchase.
Can this second option be done?
Thanks
Stamp duty will be at market value regardless so will CGT. There are various legal issues with paying undermarket value so it may be worthwhile paying market value and for them to make a gift back to you if they choose. This will have many advantages if you were to later rent the property out.
If you do choose to pay a value before market most banks should be able to lend to you based on the valuation rather than the purchase price as this is a favourable sale between family members. This may save you LMI
Seek legal advice.
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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