Forum Replies Created
- Qlds007 wrote:Hi Terry
Never like to disagree with you as you know but might have to to so on this one.
http://law.ato.gov.au/atolaw/view.htm?docid=AID/AID2010162/00001
We have done a number of deals for clients this way thru a couple of leading Accountants in Brisbane and never had it raised.
Several of the clients have been fully audited without issue.
Easier where you work in an offset account to the mix.
Cheers
Yours in Finance
Hi Richard,
I agree a related party can lend to a SMSF at lower rates than commercial rates. The ATO ID you refer says this, but this is only for the SIS Act. It doesn’t cover someone borrowing and onlending to a SMSF at x and onlending at y – where y is less than x. This doesn’t make commercial sense and the individual would only be able to claim interest to the extent of the income they receive. ie they couldn’t claim a loss.
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
Qlds007 wrote:If you intended to consider that you may want to look at a Related Party Loan where you could lend money to the Super Fund at a cheaper rate.Maybe borrow it personally at say 5.5% and lend it out at 4.5% claiming the Tax loss in your own name.
Richard, Lending at a loss? This would not be allowable because it is not a commercial transaction.
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
Probably not a company.
A trust structure is well worth considering, but make sure you get good legal advice as there are about 10 areas you need to consider – succession, stamp duty, trust law, land tax, convenacing act, coroporations act, SMSF laws etc etc.
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
You have made one post and have listed a website – I would suggest people be wary of this sort of thing!
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
Good question – to which I don't know the answer.
You will have to look at what income they base the FTB B on – it is not taxable income. Any loss from a rental property could affect affect you – but not claiming a deduction would also mean a higher income from rent.
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
Yes in Vic it can be done for stamp duty of about $50. You will also have the opportunity of redoing the loans – you will have to anyway. If you set this up right you will be able to claim more interest and save more tax. You need to seek legal advice and tax advice and arrange for the conveyancing to do done. Loan exit and entry fees and govt charges such as mortgage and discharge of mortgage.
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
Spongy wrote:Thank you all very much for your expertise. After discussions with my brother he has decided not to go ahead with the uBank refinance. I only have one investment property myself and unlikely to add to it as I'm now a stay at home mum so we're on one income, but I'm wishing I hasn't refinanced my loans! Oh well, maybe when I go back to work I'll refinance again and move forward.Just one this point, are refinance expense deductible? From what I can see borrowing expenses are over 5 years, but can't find anything to say this also applies to refinancing.
Cheers
Refinancing involves taking a new loan so the same rules apply. Deductible over 5 years or the life of the loan if shorter. You can also claim the rest of the borrowing expenses on the first loan if less than 5 years has past – assuming both are investment related.
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
the dangers of crossing securities. they have you over a barrell and you will be at a disadvantage if you pay down an ip loan. you will end up paying more tax.there is a possible solution to maintaining deductibility involving loan agreements privately, but probably the term deposit as security is the easiest option.
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
it may be better in long run not to pay down investment debt while not yet having a main residence. you can acheive same interest savings with a 100% offset account and potentially save yourself thousands in tax down the track.
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
which state Dave?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
of course it is legal to ask for payment.
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
To be able to claim interedt the borrowed money needs to be used for income producing purposes.
If you borrow money and gift it to a trust you cannot claim the interest.
If you onlend it to a trust you could claim the interest if it is a commercial transaction. That woukd mean charge the trust at least what you pay in interest. This would be income to you.
If you borrow to buy income producing units of a trust then you may be able to claim the interest depending on the set up and wording of the deed. You would have to be absolutely entitled to both income and capital of the trust to be able to Claim 100%.
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
Mortgage duty has been abolished in NSW for personal borrowers.
There is an exemption from stamp duty on the transfer of land in NSW upon relationship breakdowns, but certain conditions need to be met. He should seek legal and tax advice as I was talking to an accountant this morning whose client did something similar and stuffed things up.
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
tom123 wrote:whys that?Too risky and too many complex legal issues so high potential for disputes and therefore litigation.
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
tom123 wrote:i see, cause my orginal idea was to go buy houses by baby sitting a loan strategy so i wouldn't need to pay stamp duty or a deposit. then rent it out as a buy and hold and just keep doing that.would you say it's more of a short term strategy then?
Cheers, Tom
Don’t really see it as a strategy at all!
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
Must be a non bank lender – these are often best avoided.
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
tom123 wrote:Hi Terry,with baby sitting a loan, could i do this as a buy and hold stategy? also what are the disadvantages for the vendor by letting me do this with their loan?
You possibly could. But this would be potentially dangerous for both parties so seek legal advice.
Disadvantage for the vendor is that he/she is giving someone an interest in the property, creating legally complex issues surrounding priorities. What if the vendor as legal owner died and left the property via a will to his son, the loan babysister would have to take legal action pretty quick to stake their claim and this could lead to a costly case in the Supreme Court.
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
GrantMck wrote:Hi Wilko1,The ATO is forever changing the legislation and policies. The last amendment was on the 20 th June 2013. I have noted two useful links into the ATO website which will explain a few different scenario's and also the 2013 Property Investment Guide.
A little research upfront is always advisable because if the ATO start looking into your Property Investment transactions, it is very likely that it will not stop there!
http://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/ind00342353n17290613.pdf
Cheers Grant
Grant,
The ATO doesn’t change the legislation and doesn’t have the power to. Legislation is changed by government.
The ATO does change focus, and does ignore and misinterpret legislation sometimes.
On this topic, I think the law is clear. If someone is buying and renovating ‘as a business’ then they can be taxed as a business and the main residence exemption won’t apply.
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
Wilko, could be uncrossing a cross, but
Cross collateralising loans is when there are 2 securities for 1 loan. (ie the collateral/security is crossed, not the loan).
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Possible, depends on the circumstances.
see steele case
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au