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.
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This topic was modified 3 years, 3 months ago by
wan0151.
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 MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hey Terry,
Thanks for the information. In regard to your last point, what would be the possible ways of extending it?
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 MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Won’t that drastically increase the monthly repayments though?
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 MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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This topic was modified 3 years, 3 months ago by
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