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
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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
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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
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It depends on what assets/investments your Trusts hold. My accountant charges about $100 for the trust return and then about $100 per property, extra per shares and capitals gains and business etc.

Terryw
Discover Home Loans
North Sydney
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There will be a time when banks will say no more, but shopping around should let you keep going. some banks get worried when you are too rent reliant. I once asked a lender to define rent reliant, and was told if the client needed the rent to service the loan, then they are rent reliant!!!

Terryw
Discover Home Loans
North Sydney
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I was keen on cashflow positive properties, but my ideas have changed and would now only go for growth. Any cashflow would be a bonus.

Terryw
Discover Home Loans
North Sydney
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I agree that the first one is the hardest. It is harder to qualify for the finance and it is harder because you don’t really know what you are doing.

But it sounds like you have planned well as this property may also be CGT free if you sell within 6 years.

Terryw
Discover Home Loans
North Sydney
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