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I too would be wary of entering into a partnership. Do it on your own if you can.
You should probably plan your strategy for a while before you sstart. maybe start somewhere near home. buy a house, live in it, get the FHOG, and then move out. If you live in it first, ylu can still claim it as your main residence and it will be CGT exempt for up to 6 years after moving out – it you ever sell.
I personally would not buy anything outback, in small towns, unless there was strong prospects of capital growth. $10-$20 pw is nothing if there is not growth.
Terryw
Discover Home Loans
North Sydney
[email protected]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
There may be captal gains tax imposed on the period it is rented out if you do not first live in it. If you hold for the long term this would be minimal anyway.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Try McDonald & Associates in Melbourne.
Terryw
Discover Home Loans
North Sydney
[email protected]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
One of my clients sold an option to a developer. I think the option fee was relatively small – about $2000 on a $500,000 property, but the term was short – one year, to let the developer get council approvals etc, and she was paid about $800,000 for the property. The developer made millions by buying the whole block and developing units.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Do not sign anything without first talking to a solicitor!
Terryw
Discover Home Loans
North Sydney
[email protected]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
I agree that they way you have done it is not good. mixing business loans and non business – how do you portion the interest at tax time. You would want your PPOR loan to be PI and you IP loan to be IO to maximise your tax deduction. If you have spare cash, this should be parked in a 100% offset account agianst your home loan. Then if you want to use the cash for a new IP, put it into your home loan account, and borrow the money again -either as a LOC or separate IO loan so the interest will be tax deductible.
Terryw
Discover Home Loans
North Sydney
[email protected]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
none! Well almost anyway, there are a few small non bank lenders willing to do it. Also some local bank managers of major banks will allow wrap loans (possibly against their own bank’s polices).
Terryw
Discover Home Loans
North Sydney
[email protected]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
Sounds good in theory……
Terryw
Discover Home Loans
North Sydney
[email protected]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
Hi Rossolot
I haven’t heard of these before, could you please give us a quick run down??
Terryw
Discover Home Loans
North Sydney
[email protected]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
I would only buy something if there was good potential for capital growth. Rental yield is good, but won’t get you far without an increase in value.
Terryw
Discover Home Loans
North Sydney
[email protected]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
As a guide, these non conforming lenders have a credit matrix whereby they rate the applicant in terms of risk. Each lender is different, but most have about 5 ratings. Each rating has a different interest rate to reflect the risk. Low Docs are also a bit higher in interest rates, and rates also rise as you go higher with the LVR. If someone is a recent bankrupt of less than one one year, they may save about 0.60% if they waited until after 12 months.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Nope. I have never heard of them either.
Terryw
Discover Home Loans
North Sydney
[email protected]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
One of my wrappees rented out the property – without my permission. I didn’t know until after they settled on it. Had no problems at all.
Terryw
Discover Home Loans
North Sydney
[email protected]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 trouble with Financial Planners, is it is hard to find a good one that will recmoment property. Most earn high commissions from managed funds and annuities etc. So it may be best to find one that charges you upfront, rather than one that just gets a commission. This way, they should be less biased.
Terryw
Discover Home Loans
North Sydney
[email protected]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
No. But some banks do take into account negative gearing benefits and depreciation – eg. Macquaire Bank.
Terryw
Discover Home Loans
North Sydney
[email protected]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
I think it would only be deductible if the charity is registered in Australia with the ATO as a non profit organisation???
But if you had a trust, then the trust could probably distribute some money to the charity before tax.??
Terryw
Discover Home Loans
North Sydney
[email protected]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
Hi Misty
Sorry, I can’t really understand your questions fully, but…
A trust is not a legal entity, so cannot be sued. It is the trustee that is the one that can be sued. Maybe even directors of the trustee company can be sued too, if they have made bad decisions.
If the trust property is used as security, and payments aren’t made then the property can be taken by the mortgagor.
If the trustee or director of the trustee company gives a personal guarrantee for loans or rent etc, then they will be personally liable and their non trust assets will be at risk. etc
ps. I am not a lawyer.
Terryw
Discover Home Loans
North Sydney
[email protected]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
A trust is certainly very useful. As John mentioned, a discretionary would be ok if you are positively geared, but a hybrid may work out to be more effective tax wise, so check with you accountant. setup costs vary from $175 – $2500. I have even heard of one case where someone had a barrister prepare a trust deed whihc cost $10,000.
Terryw
Discover Home Loans
North Sydney
[email protected]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 is pretty hard to convince a valuer that the property has gone up so quickly. That will probably be the hardest part.
You will not be able to access the equity before settlement, but with some banks you could apply for a loan increase immediately after settlement, and get the place revalued and borrow up to 90% of this new value. But there would be extra fees invloved such as loan variation fees, and maybe valuation, LMI, Stamp duty on the increased protion of the loan etc.
Terryw
Discover Home Loans
North Sydney
[email protected]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
I think it depends on the state you are in. eg. I have wrapped (installment contract) in VIC 3 times, with the wrappees getting access to the FHOG immediately at settlement (or soon after), even tho the property was in my name, and I had a loan on it. This was about 3 years ago now, so things may have changed.
Terryw
Discover Home Loans
North Sydney
[email protected]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
