ET

Yes you can still borrow up to 80% or even 95% using a trust. But if you have two trustees, both have to guarrantee the loan. so this is where it hurts your borrowing capacity. You could be saving one person for future loans.

eg the mortgage insurers have a limit of about $1.5mil (for both). If you were joint trustees you could only borrow up to $1.5mil. But if you each had a trust with one individual trustee (or one director of the trustee company), then you would get $1.5mil each = $3mil in borrowing capacity.

Terryw
Discover Home Loans
North Sydney
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Don’t deal with nab, but Westpac only takes into account 75% of the rental income. However, they are fairly good overall from a serviceability perspective.

Terryw
Discover Home Loans
North Sydney
[email protected]

also try

http://www.chrisbatten.com.au
http://www.gatherumgoss.com.au (look for the book ‘trust magic’ on this site).

Terryw
Discover Home Loans
North Sydney
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Terry

There are private type lenders out there who will lend up to 70% LVR without many restrictions, rates are a bit higher (starting around 8%). You can also go up to about 80% LVR using a second mortgage – high rates. They are mainly interested in the securtiy, and may not even check your CRAA.

Terryw
Discover Home Loans
North Sydney
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Good points. I think that was written by the Julia who posts here occaisionally.

Having a 100% offset account linked to the IP can have the same effect as a LOC, but usually with a cheaper interest rate. This keeps the monies separate so no decrease in the investment loan occurs when money is deposited in the account – but it still saves you interest.
So you should have no problems with ATO in this regard.

Terryw
Discover Home Loans
North Sydney
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I think companies are forwned upon is mainly because companies do not get the 50% CGT exemption which individuals and trusts get after holding the property for 12 months or more. This can amount to hundereds of thousands of $$$$$

Trusts also have tax advantages and asset protection advantages.

Look into getting a trust.

Terryw
Discover Home Loans
North Sydney
[email protected]

Julian

With the first trust I set up, I had both me and the wife as trustees. I didn’t realise at the time, but buying in two names or two trustees giving guarrantees severly limits your borrowing capacity. So I have set up some more, one each. I also have a unit trust for some joint investments, with the unit holder being my discretionary trust.

It is also an idea to keep your business and properties in a different trust, just in case.

Terryw
Discover Home Loans
North Sydney
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I think you can only claim in proportion of ownership.

Terryw
Discover Home Loans
North Sydney
[email protected]

PeterG

I have a few trusts, but generally just use a discretionary Trust (ie family trust) with individual trustees.

The trustee purchases assets on behalf of the beneficiaries of the trust. Just think of opening a bank account for a child. They ‘own’ the money, but you manage it for them. it is just like that.

The benefits are asset protection (as you don’t own the trust assets) and tax reduction, by enabling the income to be distributed to the lowest tax payers (amoung the beneficiaries).

Setting up a company as trustee is not necessary, but adds to the safety of the structure.

Terryw
Discover Home Loans
North Sydney
[email protected]