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  • Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    It could be there was a contract in place.

    I would suggest you write to the company and dispute the bill and state you had an agreement for $4500 to $5000. Be nice about it and see what they say.

    If you get a nasty reply then reassess.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Profile photo of TerrywTerryw
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    @terryw
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    Well, oral contracts can be binding. But was it a fixed price agreement? What were the other terms? Was it even an agreement?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    gmh454 wrote:
    Richard you seemed to indicate that a 80% loan through a fund is available. Could you tell us which lender goes this high with a SMSF. Thought they stuck to around 66%.

    That is how Richard makes his money, knowing what to put where. It is intellectual property built up over many years of hard work. Why not use Richard to do the loan for you.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    dangermouse99 wrote:
    Hi TerryW and Richard

    My friend wants to buy and live in the front house, $400K is all he can afford so he can help me by putting dollars in while I develop the 2x Townhouses at the back. Do u mean to divide the land into 3 as there is 2 Townhouses behind the main front house? This is a new equation for me so just try to get my head around it. Also how much and how long does this sort of structure take to setup.

    Many Many thanks for your help.

    Cheers

    DM

    You basically have to decide how to divy up the land on purchase. Then each party buys in the final percentages. It is is going to be 3 blocks then may 30% 30% 40% depending on a few things.

    If you don’t do it properly up front then stamp duty will be payable on subdivision if you change the names on each block from 2 or 3 to 1 name.

    You need legal and tax advise on this and then you need general legal advice on structure as well.

    It will be a bit complex and will cost you a few thousand, but this may be able to save much more by reducing stamp duty in the future.

    You will also need finance advice because if your friend chips in $400k cash but he is on title then he will have to guarantee any loan that you get to buy the land.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Main residences are generally exempt. But not always. eg>

    If you run a buinsess from the home,

    If the land area is over 2 hectares

    If you are in the business of buying and renovating.

    If it is a normal size block with one house and no renters or business conducted at home then it would probably be exempt and you would probably be able to argue that you are not doing this as a business.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    That must have been great. You should have trademarked the name maybe!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Qlds007 wrote:
    Amazing what advice some so called experts provide.

    Met up with a couple of forum clients earlier today in Melbourne and amazed what advice their existing Financial Planner has given them on what they can and cannot do with their SMSF.

    Nothing amazes me in the current climate.

    In saying this dying is a radical way of getting out of getting out of a liability claim.

    Cheers

    Yours in Finance 

    I saved a bloke once from a financial planner – sort of. Planner recommended he sell his commercial building to his SMSF and lease it back. This was in the statement of advice prepared by the planner. Only problem the land was leasehold and he didn’t own the land. This would have been a breach of the SIS Act and his fund would have been non complying.

    The fin planner critised me as being too negative.

    Amazingly the guy stayed with the planner.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Jamie M wrote:
    Terryw wrote:
    Furthermore you will lose the CGT exemption status.

    Which is a massive thing to lose!

    Imagine owning your PPOR for a couple of decades under the wrong structure – then selling it to find out that you have to pay a nice chunk of CGT. 

    Cheers

    Jamie

    I had a client once who owned their PPOR in a company. There were parents and 4 children and all contributed to the purchase so their accountant suggested a company be set up to own the property with all 4 shareholders. Great.

    But then they got hit with land tax and the CGT tax on the sale. The refused to pay the land tax so the OSR put their company into administration. They then had a hard time accepting this and getting the company back with thousands in legal fees. They then heard that there was a primary production exemption. They had on beehive but put in for the exemption with the OSR asking them about 4 pages of detailed questions on how many bees they kept and where they sold their honey etc. In the end they had to wear it all.

    Accountant had died so they couldn’t have sued him.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    I had a client that optioned up about 20 blocks of land off the plan. They tripled in value before settlement. He was a millionaire out of that deal. I’ve also had other deals where I have sold an option and it hasn’t been exercised.

    Are you willing to lose the option amount?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Transferring your main residence to a trust will create several problems and won't assist in increasing borrowing capacity.

    You will pay stamp duty, possibly land tax and receive little in the way of asset protection. Furthermore you will lose the CGT exemption status.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    IF YOUr friend is going to be living in the front house then a trust may not be suitable.

    Maybe tenants in common might be better. Your share in your trust and his share in his name. Draw up a deed of partition and then settle. later divide the land into 2 with 1 block owned 100% by each of you. Possibly no stamp duty on the split.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Terryw wrote:
    Grreg wrote:
    Terry – I think you have nailed it. We do NOT want to use our SMSF to borrow. The SMSF is just contributing funds. I think I might not have been clear enough about that in my initial post.

    The plan would be that the SMSF simply contributes cash to the deal (through buying units in the unit trust). We would personally borrow from the banks in our own names to purchase our units in the trust. So it is like a JV.

    My concern is whether we can do this as we are all family. I believe there are complications about SMSF and related parties investing.

    Does that sound like a workable plan? Or are there still problems?

    Greg

    Should be doable.

    And Anthony from A4 Companies seems to know a lot about SMSF structures and investing.
    https://www.propertyinvesting.com/forums/legal-accounting/4347022#comment-284017

    I am a lawyer and could advise on the set up, but it is not something that I do everyday. But better to speak to Anthony I think.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    Grreg wrote:
    Terry – I think you have nailed it. We do NOT want to use our SMSF to borrow. The SMSF is just contributing funds. I think I might not have been clear enough about that in my initial post.

    The plan would be that the SMSF simply contributes cash to the deal (through buying units in the unit trust). We would personally borrow from the banks in our own names to purchase our units in the trust. So it is like a JV.

    My concern is whether we can do this as we are all family. I believe there are complications about SMSF and related parties investing.

    Does that sound like a workable plan? Or are there still problems?

    Greg

    Should be doable.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    ChrisA1 wrote:
    Appreciate your comment here Terry.

    Could you please explain about reborrowing by setting up a new loan.

    I am aware that once I take the money out of the offset, the home loan increases. I took this as a cost of starting the IP journey until the IPs started revaluing. However thanks for the information that this money wouldn't be treated as deductible debt – I thought it would have been since the funds were only in the offset and the purpose of the money was for investment purposes?

    I am not wanting my PPOR revalued again as I have had the PPOR revalued twice as I paid the loan down and each time the bank allowed me equity but shrunk my loan so I didn't have the redraw funds available, if this makes sense….

    I have the feeling the bank will say …you again…. I suppose the reason why I am leaving the money in the offset is to keep my PPOR loan out of the mix going forward. I was wanting to view the funds in my offset account as 'savings' towards my IPs and keeping the funds in the offset to lower my PPOR loan in the interim.

    Appreciate your comments as I feel I am going down the wrong track with my thinking….

    Say you had a $300,000 loan with $100,000 saved in the offset.
    You would pay interest on only $200,000. At 6% = $12,000 pa approx
    The offset would save you $6,000 pa in interest.

    Then you decide to buy a new investment property. You have 2 choices
    1. Use the offset money for the deposit, or
    2. Borrow the full amount

    1. You withdraw $100,000 from the offset.
    Your loan on the main residence remains the same, but now you are paying interest on $300,000 so this will mean $18,000 pa in total. None of this will be deductible.

    2. You borrow $100,000 by setting up a new loan.
    This means you keep your $100k in the offset saving you interest, but you borrow another $100,000 for the investment.
    Therefore your main residence’s interest is still $12,000
    But your new investment property’s interest is $6,000 extra because you have borrowed this money.
    Your total annual tax deductions have been increased by $6000 pa by using the second method. This may mean an extra $2000 extra cash saved per year for 30 years….Compounding

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    ChrisA1 wrote:
    Hi Terry

    Just wondering about the other way. I am holding money in my PPOR offset account, which is currently reducing my PPOR loan until I use it down the track as a deposit for further IPs/investments. Since this money is in my PPOR offset, I assume it is simply called 'savings' and can be used as I like

    It will not be a good idea to use money in an offset on your home loan for investment deposits. This is because when you take the money out your interest on the home loan increases and this will not be deductible.

    Better to borrow the money out of equity. If no equity then best to pay down the home loan and then reborrow it by setting up a new loan.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    I would only pay down the loan if you have a main residence fully paid off. Otherwise you will be losing tax.

    And then if you have have a main residence paid off I would still rather use a 100% offset to store the cash as this will save you the same amount of interest but make the cash available for non investment purposes without affecting the tax deductibility of the loan.

    ie if you pay $50,000 off the loan and then need to buy a new car you may have to redraw (= borrow) from the loan and this will cause the loan to become a mixed purpose loan (part investment part personal) and it wll mean you won't be able to claim the interest on the amount redrawn – whereas the offset method could have avoided this totally.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    It might be fair to ask for a small increase, but will the tenant want to pay it?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Profile photo of TerrywTerryw
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    Qlds007 wrote:
    I started doing Deposit Finance in 1996 and it was the foundation stone of our Vendor Finance business (FHOG Pty Ltd).

    Still very much alive and kicking some 17 years later.

    As long as the lvr is less than 90% you will get around the genuine savings problem with a few lenders / mortgage insurers although 1 of the insurers will allow a 5% gifted deposit.

    Cheers

    Yours in Finance

    FHOG Pty Ltd is a great name Richard and you had some great foresight to register it in time.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    I was knocked back for my first loan by the NAB. I didn't go and see anyone else, I just thought I couldn't get a loan and this delayed me investing for about 2 years. Later after I became a broker I realised I could have easily gotten a loan, even with the bank that knocked me back.

    That property has gone up in value about 5 times since then.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    The units of the unit trust which are held by the non SMSF entity could be used to raise capital. The units could be charged or used as security, but the SMSF owned units couldn't be mortgaged. But the SMSF could use a bare trust to borrow to acquire the units – but it would be very hard to find a lender willing to lend on this basis.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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