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If you sell, in addition to the costs, you will lose any future capital growth.
Terryw
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I am not an accounant either, but what you have done appears OK. I think you can apply for the FHOG after you have moved in. You should know soon anyway!
Terryw
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I owuld just go through the lender to get the valuation. No need to double up, and it would save you about $300.
Terryw
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It could be possible. If you lived in the property, you would save rent and it would be easier to renovate, and you would not have CGT to worry about.
Terryw
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I don’t think Steve suggests people buy in small regional towns. I would not suggest this either. Making $20 per week cashflow with no growth potential is pointless. What happens if rates rise, or the hotwater system bursts – there goes your cashflow. And what happens if prices drop?
However you can get both cashflow +ve and high growth. I’ve seen it happen, and have done it myself.
Terryw
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Yes Banks try to steal our customers all the time. especially NAB I hear.
JPD, You have to remember that large banks are bureacratic messes. There are many staff there just going through the motions, not caring etc. There are so many departments and sections that things go missing, and nobody wants to take any responsibility.
Terryw
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Profiteer.
In that scenario, a company would own the property as trustee. ie its the trusts asset. So profits could be distributed to any of the various beneficiaries – not necessarily the company.
Trusts cost as little as $137 to setup and can go up to $10,000. Companies cost another $900 +. You will also need to get the trust deed stamped = $200 in NSW.
Terryw
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I went to a meeting yesterday regarding the new products. Rates haven’t been sorted out yet, but they were expecting a rate of around 8.50% for a 90% LVR as a low doc. This is high, but much less than the rates on existing 90% low docs.
The mortgage insurer is different to the one mentioned by Tony above. I have forgotten the name of the company now.
Terryw
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Mr VIP. You will also need money for closing costs – about 5% of PP.
Terryw
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Land tax is a progressive tax – the more land you hold the greater the percentage. There is also a threshold where no tax is payable up to a certain limit. You had better find out what these are in your state and plan accordingly.
After a few properties, you may consider setting up a trust. These will have to pay land tax from $1 value (ie no tax free threshold), but you can then keep setting up new ones for future property to keep the tax in the lower threshold
Terryw
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Hi Wayne
Banks get a bit scared when people want money to start up a business – probably because a high percentage fail. They also charge a higher interest rate.
A better way maybe to apply to increase your loan for investment purposes.
But you figures are not entirely correct. With LMI, you could increase your loans to 90% of values – if you service. $465,000 x 90% = $418,500. Available money would be this less current loans which will equal only $83,000.
If you are starting a charter business you may be able to lease boats and some other equipment.
Terryw
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I don’t think vendor finance would help in this situation. The lender would want the personal loan out of the way probably because your brother’s income is not enough to service both loans.
If he went for vendor finance he would be borrowing more (at hgiher rates and shorter terms), so this would worsen the situation.
Terryw
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Some banks are fairly inflexible – especially ones starting with N.
Terryw
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Hmmmm. Since you already have it, you would probably lose too much by selling it. Just don’t crash it!
Terryw
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Start with family, friends (beware, you could lose the firends!), then talk to everyone you can, accountants, mortgage brokers etc. You never know where things may lead!
Terryw
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I don’t know why, but apparently this ‘loophole’ had been closed down by the ATO several years ago. Maybe the withholding taxes.
Terryw
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Shar, that is amazing!
Things must be different in NZ. In Aust all trustees would be required to guarrantee the loans!
Terryw
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You will be buying half at market rates so will pay stamp duty accordingly. Even if you pay $1, you are required to pay stamp duty at market rates. He may have to pay CGT too if this was an investment property.
Terryw
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It may be better to sell the property with no finance owing. This may give you more ‘cash’ which can be used to pay down your home loan, and then you could borrow again to invest.
What is best woulc depend on how much CGT etc you would have to pay. This would depend on how much they were purchased for and how much they had gone up.
It would be very wise to get all figures together and then spend $500 or so taking to an accountant – as this could save you thousands.
Terryw
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If you are Australian you can get various info at http://www.ato.gov.au on what you can claim etc. You can’t claim rent, but must declare it as income. Then you deduct any expenses such as rates, insurance etc. You can also claim things that don’t actually pay for each year such as travel, borrowing costs, depreciation on building and fittings etc. If the figure comes out negative, you have made a loss, and this will come off your other income, resulting in a tax refund. If it comes out positive, it means you will have to pay more tax on this portion.
Terryw
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Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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