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A caveat cannot create an equitable interest. A caveat is notification to the world that someone other than the legal owner has a non-legal interest in the property. In this situation it would be the mortgage which creates an interest in the land.

Yes it can improve serviceability – you would think the opposite though.

These days most lenders assess payments for other financial institution loans as PI and ignore any IO period.

So having a new IO loan for $100,000, 5 years IO and 25 years PI, for example, will result in the lender assessing the loan as 25 years PI.

However if the loan…[Read more]

There is another thread here on this topic.

What is a ‘vestey’ trust?

Ethan – I wasn’t suggesting you do this – just that the other broker/bank maybe.

Request the client to get a copy of the servicing figures.

Probably non-disclosure. leave off a kid, a loan etc and serviceability booms. Bank staff do it as well as brokers – fraud

You could depreciate any furniture items purchased that relate to the property. You would have to wait until the property is available for rent for the tax claims to begin but you could buy now.

Don’t forget to apportion between investment and private use.

A valuation would be needed if it was your main residence and then become income producing. This would occur when renting out a room, a granny flat, operating a business there or just renting te property out.

The cost base would then be the value at the time it was first income producing. All the aquisition costs and interest etc until that point…[Read more]

Why would you want those? Out of date and questionable content.

Coudn’t claim the main residence exemption until after moving in.

You can get a mentor during the first 2 years

First is correct.

The valuation amount when you move in is irrelevant.
$500 pp $600 sale = 100k capital gain.
You have owned it 2 years. Lived in it for 1 year.
So 50% of the $100k will be assessable gain = $50k then you can apply the 50% CGT discount = $25k
This $25k gets added to your other income so the max tax would be $12k approx.

Also…[Read more]

just because a property is positive geared doesn’t mean it is a good investment. Banks will base their serviceability calcs with some stress involved – say 7% PI loan for all debts, 80% rents and large living expenses.

You could try different banks, but unless your salary is up very high you will have problems qualifying for finance after a few…[Read more]

Consider the structure of the company when setting up – parties such as who should be the director and shareholders how the constitution should be structured and also tax considerations, land tax, depreciation and franking credits etc.

Once the company is set up it can apply for the loan with the director(s) giving personal guarantees. Same…[Read more]

Yes.

The repayments are not income but part payment of capital and part income.

Also it would generally be a breach of the mortgage agreement to onsell a property via an instalment contract without express approval from the mortgagee.

They are basically frowned upon.

Merry Christmas

Don’t forget to claim a tax deduction (TD 2016/14)

The problem you will face is the legal requirement for a lender to make sure any loan to you is not unsuitable. This means they have to consider your ability to repay the loan without undue hardship. Therefore low doc loans are not so low any more. However if you will be purchasing using a company, whether in its own right or as trustee, then this…[Read more]

Giving a personal guarantee generally means the lenders will assess you as if you had borrowed the money yourself. However it will come down to the lender and how deep the dig.

Bankruptcy stops them from chasing the debt. If you default on the loan the mortgagee will still take possession of the property, sell it and then chase you for any shortfall and potentially end up bankrupt.

lease docs are not non recourse.

I don’t know of any lender lending on a non recourse basis in Australia.

Impossible to answer these sorts of ‘should i’ questions.

It is easy and straight forward to do but have you considered:
1. asset protection – does the company trade?
2. succession
3. land tax
4. income tax
5. capital gains tax
6. structure of the company – who is the director and who are the shareholders.
7. asset protection on shareholder lever
etc