try http://www.gatherumgoss.com
Author of Trust magic

Terryw
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No, loans and credit cards are not recorded as being paid on the credit file. Only applications and defaults etc are recorded.

But if you have cancelled a credit card or paid a loan off, sometimes the lenders may not beleive you, so you should keep records as proof.

Terryw
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Yep. you will pay tax. If you have held the property longer than 12months then you may get a 50% reduction on the CG. If less, then no deduction.

The relevant date is neither of those, but the date of the unconditional contract.

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Yes you could, but the lender may see that you were a shareholder or director when they did the credit check. If they do then this won`t really solve the problem as they might require further proof.

A better option would be to have a company controled by a friend or a relative. Even just leasing to a friend or a relative may be enough.

AS an aside, this is one way to divert money into a trust, if you just purchased it in your own name to begin with. If you are geting a good income, you could lease your property at a low rate to your trust which then on leases it at a higher rate, making the profit. It can then be distributed to a person on a low tax bracket.

Terryw
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Dom, if you borrow from a LOC to pay interest on your IP loan, this would free up money that you would otherwise use to pay this – which can then be placed into a 100% offset account linked to your home loan.

You should be doing the same with expenses such as rates. Dont pay these with cash, but put the cash in the offset and borrow from the loc to pay the bills.

In the end it will increase your deductions.

If all your properties are in a trust already, you could sell to a new trust – maybe a hybrid DT. But you will have to weight up the costs. Banks, ATO etc look at this as a sale and purchase.

Terryw
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I haven’t heard of a tax ruling, but have heard that some idividuals have received private rulings relating to paying interest with interest. Check the somersoft forum and the invested.com.au forums.

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I have a client with Bankwest. I think with one of his loans, we pushed them and the took the bank direct deposits as proof – less than 80% LVR = no LMI issues.

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If you have an PPOR loan and investment properties, it maybe possible for you to borrow to pay the investment loan interest and to pay off your homeloan quicker. See a good accountant, or you could get into trouble with the ATO.

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Interest rates on LOCs are the same or slightly higher than standard home loans – 0.1% higher sometimes. To avoid the higher rates, it is sometimes possible to use a normal home loan like a LOC if it has free redraw – but they don’t like you capitalising the interest.

It is possible to capitalise the interest with a LOC, and to withdraw extra funds, but you will need equity to do this. If you are starting off on your first property, then you will probably have a high LVR. It may be best to borrow 100% if possible, and put all your spare money in a 100% offset account. Then use this money to live on and for your renos.

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Hi Dom

I would be reluctant to sell, especially if they are paying dividends. Just be patient and watch the values and rents rise.

As for serviceability. Be careful with your loan applications now. If you are careful, then you will be able to qualify for No Doc loans when you hit the limit. Then you can keep on borrowing if possible.

Also look at what Christopher suggested. Capitalising interest is possible if done correctly. This may speed up the repayment of your home loan.

Terryw
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