Forum Replies Created
Yep, it was initially bought from the vendor as a dutiable transaction and stamp duty is applied, and then sold to a subsequent buyer as Terry mentioned which is also a dutiable transaction with stamp duty applied. The government likes to get its hand in the pie whenever it can.
Though I think there may be a loophole where you can get out of paying stamp duty if it is onsold for no additional consideration (i.e at the same price). Maybe Terry may be able to confirm?
Cheers
Tom
Nathan is correct Cha.
Its the purpose of the loan rather than the security it is borrowed against that determines deductibility. Since you will be using the $220K on a home to live in (i.e personal) then it is not deductible. You will only be able to claim the amount that is originally outstanding when it becomes an investment ($40K).
Cheers
Tom
If you decide to go down the bridging finance path where you decide to buy first and sell the current property later, there are lenders out there who will allow no repayments for the bridging loan period (interest is capatalised onto the loan instead).
However if you don't sell your current property during the bridging loan period (max term is dependent on the lender), then you're up for repayments on both loans.
Cheers
Tom
Coota,
The reason for the requirements are due to first home buyers purchasing property that is already tenanted on a lease. It allows the lease to run out and then the buyer to move in, claim it as their PPOR fulfilling their FHOG requirements. So if someone had that lease until month 11, and you then lived in it as your PPOR, then it is fine.
Now if you bought the property vacant, and decided to rent it out for X months and then moved into it before the 12 months, I think that is okay as well, though you should confirm this with the SRO to be sure.
Interest, etc will be deductible for the X amount of months it is rented.
Also note that if your son decided to buy it as purely an investment and not live in it nor claim any FHOG, then he will be eligible for the FHOG at a later date.
Cheers
Tom
In terms of FHOG, to be eligible he must reside in the property sometime within the first 12 months and then for a 6 month continuous period.
Same with the first home owners stamp duty concession, except you must reside in the property for a continuous 12 months once you start living in it.
Cheers
Tom
Hi Chris,
Someone else can confirm, but I believe that if you borrow funds from a dedicated investment LOC to pay for investment expenses, then any interest associated with the expenses is also deductible.
Cheers
Tom
The former, Derek.
Though as Jamie has mentioned, if you have been pre-approved once and your situation hasn't changed, there really isn't a need to renew/extend though people do want it for their own peace of mind.
The big question is how reliable the pre-approval is in the first place. There is a thread on this forum in the last week or so which went over that.
Regardless of the pre-approval, I always suggest that any non-auction purchase have a subject to finance approval clause added in the contract.
Cheers
Tom
Derek wrote:While Dec 5 seems a long way off – in property terms, it isn't. My understanding of an end dated pre-approval such as the one you have is that a finance application should be submitted before expiry date. One of the resident brokers will clarify this.
If this is correct you may want to do some 'homework' to get a wriggle on.
Having said that – an expiring 'pre-approval' is not the end of the world and it is better to make a good decision, rather than a hasty one. As an aside interest rates have recently reduced so your borrowing situation may have improved in light of recent rate movements. That is, if the remainder of your situation largely remains as previous.
Pre-approvals can generally be extended for another term (90 days or so) before the expiry date.
Cheers
Tom
delbs19 wrote:Wow thanks Jamie, Tom and Richard for the advice, I didnt think I'd get four replies so quickly.I think I'll stick with Breakfree. I was concerned because I only have one small mortgage and it seemed like I wasnt getting 'value for money' with this package. Though I've just read on ANZ's website that you can have up to five residential home loans with Breakfree and avoid loan approval fees and loan admin charges. I guess that makes the fee work a bit harder for me when I purchase IP#2.
Thanks again
Hey Richard any chance you could forward me a copy of the interview in your sig please?
cheers
The maximum 5 loans under the Breakfree package will actually become unlimited from mid next month.
Cheers
Tom
Packages from lenders usually allow multiple loans under the one annual fee. So the added costs associated with taking out a new loan with a "cheaper" lender does not mean it will be better in the long run.
It's much the same as with Wayne Swan's broken record about "walking down the road to find a better deal" every time the banks don't pass on the full interest rate cut. Funny that he hasn't told people how to actually do it! Possibly comes down to the fact that there are costs involved when "walking down the road" and that in most cases it will cost more than the saving.
Cheers
Tom
Hi Paul,
Most people would suggest yours is a good problem to have. As Terry mentioned, investing in property to save tax should not be the sole reason you do it.
Not much you can do about the extra repayments you made in terms of claiming interest for the current property, but you may be able to use any gained equity in the future for a new investment which will be deductible.
Cheers
Tom
Two things. First stamp duty is calculated at market value, so even if you bought it at a discounted price, if it is valued at the $800K mark, you will need to pay stamp duty at that number.
Secondly LMI can theoretically be added to the loan, but it is a cost that won't be recouped in full if at all. Therefore it will eat into your profit.
Cheers
Tom
The difference between applying for an owner occupier loan and investment loan is that with an investment loan, you can take into account future rental, thereby allowing you in the lenders eyes to service the loan easier, and theoretically borrow more than what you would if it was owner occupier.
There is a question that lenders ask which is if you know of anything in the near future which may affect your ability to repay the loan. This allows the lender to assess risk. So if you knowingly had the intention of starting it out as an investment, but were going to make it your PPOR and didn't tell the lender, you could be in all sorts of bother. Likewise with an employment change.
Cheers
Tom
Hi rpkim,
Terry is correct. From the ATO website:
http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00205421.htm&page=8&H8
Once you do buy an IP, then travel to the property to collect rent, or for repairs and maintenance purposes is generally deductible.
Cheers
Tom
Hi Wally,
In relation to finance, if you need your partners salary for servicing a loan, then depending on how "poor" your partners credit history is, you might not be able to finance with a regular lender and might have to go down the specialist route.
Also with a high personal debt such as the $17,000 credit card, I would suggest at least a 10% deposit, as LMI don't particuarly like high debts at 95% LVR.
Cheers
Tom
