It won’t be easy for them to get finance if they are borrowing the deposit, but they would need at least 20% to avoid having LMI involved with their stricter policies.

Is the company an incorporated legal practice?

Have you considered ways to reduce CGT and stamp duty on a member wanting to take up ownership of a property?

Hi Luke

That sure is cheap rent for a property worth so much. It must be under 2% yield.
That is something well worth taking advantage of, but you could still utilise the main residence exemption on another property.

I have done rentvesting in the past, but generally don’t recommend it.

Although you will be saving cash at the moment over time rents rise whereas those paying off of home loan would find the monthly repayments generally remain the same over 30 years. Use of an offset account and paying extra can knock this 30 years down to 10. It might actually work out cheaper in repayments about the 5 year mark – that is with rent rises the rents paid would exceed the repayments on a home loan at this point.

Once the main residence is paid off it can help serviceability as you are not paying anything for your living quarters – for a serviceability point of view.

Interest on a main residence is generally at a lower rate than an investment property. Careful planning can allow you to get main residence rates on money borrowed from investment properties.

Land tax is another issue – by not living in one of your properties it may be subject to land tax.

The biggie is CGT though. Not having a main residence CGT exemption is a huge disadvantage.

However, the best strategy is to rentvest temporarily by using a few strategies together.
Find the dream home.
Move into it, establish it as the main residence.
Move our and rent the home out.
Claim all associated costs and negative gear it.
Rent where somewhere to live for up to 6 years.
Keep saving in the offset account attached to the loan on the main residence

Once you think the main residence will have a positive taxable income then you move back in.
Pay down the loan, redraw to invest at owner occupied rates.
Keep paying down the non0-deductible loan splits

Advantage
– full CGT exemption
– Full land tax exemption
– owner occupied rates on at least part of your investment loans
– non-deductible debt being quickly paid off
– servicing improves
– taxable income lower as not paying tax on rental income

Get some proper advice because you will not be able to claim depreciation on fixtures and fittings unless the property is new. As you will be living in it the property will not be new when you rent it out. Possibly $18k less deductions as a result.

You will need some complex and expensive legal advice.

The trust will be a controlled foreign trust.

Here is the link to that thread I mentioned

https://www.propertyinvesting.com/topic/5031860-trust-strategies-to-increase-borrowing-capacity/

Yes, but..

But you are conflating a ‘loan’ with a ‘mortgage’ when they are two separate things. A mortgage is a charge over a property to act as security for a loan. Since there are 2 owners there must be 2 mortgagors because banks will not let their loans be secured by part of a property.

So to get the loan into 1 name, and secured by the property, the bank will require the other person to be on the mortgage and to guarantee the loan. Because if you don’t pay they will have to pay this does not really change serviceability at all.

No it can’t be said over every property. With some the plan is to invest long term and receive rents.

Legislation doesn’t have a minimum, but the time factor would be relevant to determine if it was the main residence.

There is no 6 month rule. One week could be sufficient in some cases.

You could always start at 80% and increase later – but harder to cash out later.

You don’t want to incur LMI unnecessarily. What if it takes you a full 12 months to buy the 4 properties? There could be growth in the meantime, which might have meant less LMI if you had waited.

Also there is a question about the deductibility of LMI when you are incurring too soon compared to the investing.