[CJWentworthParticipant@cjwentworthJoin Date: 2006Post Count: 47]

January 27, 2007 - 4:19 pm

ahhh. Figured as much but yeah, figured I’d ask anyway (it’s never safe to assume when you don’t know much lol)

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January 27, 2007 - 3:27 pm

I’m in a similar situation however there is a current mortgage on my parents place.

In your case you’ve got a totally separate loan (making it a heapload easier to manage), however in mine I think I will have to re-extend the current loan with either my mom or my dad.

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January 27, 2007 - 12:49 pm

if you don’t mind me asking Wayne, before purchasing the stake was the house paid off entirely or was there a current mortgage on the property?

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January 26, 2007 - 1:25 am

hrmmm. Does this include the interest from the loan?

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January 24, 2007 - 1:20 am

Ah ok cool. That’s surprised me (being allowed to have the 2 accounts treated differently) but I’m happy that it can be done.

“I think St G is one of the few banks that will allow different names of sub accounts on their portfolio product.”

What exactly does that mean? Each account under our own names I suppose.

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January 21, 2007 - 1:15 pm

Awesome. Thanks for this guys, I’ve printed out the replies and given em to my Parents to read through and decipher on their own (it all makes sense to me now, but I don’t want to “force” any views onto them).

I now have a new question here.

Assuming that we can’t get 2 separate loans, but can get the 1 loan with 2 accounts, what kind of flexibility would I have with my account?

Would I be able to ask for my account to be IO with offset? (I assume no though)

Also for Tax purposes, if my siblings were to pay board would I be able to treat my Account as if it were an IP loan (and hence any costs tax deductible?)?

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January 18, 2007 - 2:50 am

Originally posted by elkam:

Hope this has not confused you even more. [biggrin]
Elka

lol, only the tiniest bit. In your example I am taking out my own loan of 100k to pay out my dad. Will the banks allow me to do that?

After talking with my Mortgage Broker, I was under the impression that lenders would only allow one loan on the home. (Maybe I’m talking to the wrong guy eh?)

Before anything else I must thank both Terry and Elka for their time. You guys have been an enormous help and must be commended for the time and wisdom that you both commit to this forum.

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January 17, 2007 - 4:03 pm

Originally posted by Terryw:

say its worth $500,000.

Just think of it as a sale of the property and then repurchasing it.

Assuming they will split it evenly, that means your dad’s share is worth $250,000, less his share of the loan of $50,000 = $200,000.

Same with your mum.

Now your dad will gift you this $100,000 of his $200,000 and you buy the same property with your mum. You have $100,000 equity and your mum has $200,000 equity with a combined loan of $200,000.

Maybe you could split the loan in 2 and have 2 separate loan accounts of $100,000 each.

Thanks Terry, I’m still a little fuzzy on the details there but it does make sense. I will keep mulling it over in my head until it makes sense

In response to the last paragraph there “Maybe you could split the loan in 2 and have 2 separate loan accounts of $100,000 each.”, in such a case would each loan be liable only to 1 person, or if I paid off my 100k, would I then still be liable for Mom’s 100k?

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January 17, 2007 - 12:57 pm

Ah ok cool thanks. Clears up a few things.

The reason I ask is in response to a question I asked a while back about my parents house but I will post again since the situation has changed.

Mom and Dad both own the family home with a 100k loan currently owing. They’re getting divorced and have to figure out how to split the home. Mom wishes to keep, Dad wishes to sell. Dad is willing to take 100k which mom can’t afford, but I can.

Since Dad is selling “his half” he expects me to receive 50% of the house with a 100k loan.

Is there any way we could set it up so that Mom and I own the house as Tenants in Common?

Ideally I would take out my own loan, however my understanding is that the current loan will have to be extended 100k with both Myself and my Mom on the loan.

The reason I would prefer my own loan is so that I could pay it off early as well as keeping repayments “fair” (I don’t want her to pay extra but only benefit 50% and vice versa)

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January 16, 2007 - 1:42 pm

Originally posted by AmandaBS:

Hi Guys,

Well it has been a few years since I practiced in Tax Accounting but I do recall the 6 year exemption rule that applies to your PPOR as outlined above. I also thought that a taxpayer was required to make an election in his/her tax return about the exemption so please call you Accountant to verify.

I was running into problems with that when discussing with a mate of mine. I remember reading an example saying that you would only have to Elect your PPoR upon sale of the property, but his argument was that for Tax purposes during ownership you would have to elect it yearly (which makes sense)

So yeah, renting out a PPoR for 5 years as an IP, for Tax Purposes one would have to assume that you would declare the property as an IP. However upon sale you would then elect it as a PPoR contradicting your previous statements… I dunno! lol, I suppose that’s why I’m asking

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January 14, 2007 - 3:50 pm

hmmm. I wonder than as a first I.P if it would be viable to purchase it as a PPoR and “convert” it to an IP for 6 year intervals?

Especially at the beginning of your investment career when you will be dealing with 1 or 2 properties, why not use this as a failsafe in case/when you choose to sell your first property.

Of course this is on the assumption that upon “converting” a PPoR to an IP, results in having any expenses on your PPoR tax deductible. Other than being unable to claim purchase costs, would’nt the Interest far outweigh that?

I’m sorry I don’t know how to word my questions properly, I’m still trying to figure it all out.

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January 13, 2007 - 3:17 pm

Thanks for your patience and answer LA. I tried to search through the threads but the search never loaded.

I’ll double check with my Accountant, though I’m pretty sure that TerryW is correct when he states you can move in after 5 years and continue to rent it out afterwards for 5.9years

A little thing in your example LA is that you’re no longer living in Australia (unless the L.A stands for someplace in AU that I dont’ know of lol)… To take my example to the extreme, could I live (renting) next door to my PPoR while it’s rented out?

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January 6, 2007 - 12:37 pm

Sorry, I posted this in a hurry for work and realized how much info I left out too late.

The block is 2000sqm which a little above the average block size.

There are a fair amount of Land Developments going on at Forrest Beach

When I purchased my plan was either to Divide the block at some later date or build a few townhouses/units on it.

I bought for CG as well as potential for later development.

I don’t believe rentals are too strong at the moment, however as Ingham grows I believe the market will pick up.

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December 26, 2006 - 11:04 am

Originally posted by elkam:

Hello CJWentworth

Maybe I’m wrong but from your original post I get the idea that you and your brothers and sister are now living with your father in the house as the carer and not your mother.

The only reason I am asking is that if this is the case I am not sure if GMH454s’ plan will work as it changes the dynamics of the situation.

Actually I moved out 2 years ago. If I were to be “buying” myself into the situation I would probably end up moving back home, however my preference would be to continue living on my own.

The “offer” from Mom and Dad at the moment (it continues to change as they continue discussion) is 20k from me to “buy” mom out, and myself and my Dad take out separate loans and join own the house under Joint Tenancy.

ie, the current loan of 112k is split evenly between me and dad, then I take out a further 20k. Dad has a 56k loan, I have 76k.

At the moment I don’t think anyone’s considered a legal Carer for my Dad. How would that effect things?

Eddie: I’ve been looking at a situation similar to that except instead of buying the family home, me and my siblings buy properties together.

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December 24, 2006 - 3:10 am

sorry guys I’ve been getting used to this forum and wasn’t able to find this post lol. I’ve read the comments and will reply asap

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December 21, 2006 - 1:47 am

awesome thanks guys. I see I haven’t placed as much importance in Post Settlement Support as I should, nor considered the need for future borrowing.