Mel

The gain is just added onto your taxable income. In your example, your income would go to $75,000 and you would pay tax on this amount.

There is a booklet available for download from the ATO webiste or a paper copy can be sent if you call them up.

Terryw
Discover Home Loans
North Sydney
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Steven

I am not sure I understand what you are saying. being a beneficiary of a discretion trust or a hybrid trust is no guarrantee of income. It is up to the trustee’s discretion. But since personal guarrantees are involved, you would personally be responsible for the loan. Therefore you must inform future lenders about your guarrantees.

Terryw
Discover Home Loans
North Sydney
[email protected]

Steve

So you are saying that trusts can save you tax. but it makes no difference in serviceability if you borrow through a trust or not because personal guarrantees need to be given. Infact it may even hinder serviceability by using a trust because you, as trustee, would be responsible for the loan, but may not receive any income from the asset as a distribution as the income would go to the benficiaries on the lowest taxable income.

Terryw
Discover Home Loans
North Sydney
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use a credit card as deposit, or borrow the 20% deposit from someone, maybe? This could do until you can access that equity in 3 weeks?

Terryw
Discover Home Loans
North Sydney
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Luckily cross coll can easily be undone after some growth. Simply apply to your lender for a release of security. for a small fee they will get the property revalued and un cross it (if equity is there of course).

Another disadvantage may be higher LMI premiums. If you are using 2 properties as security, you may have to pay LMI on both-depending on how high your LVR is.

Steven, are you saying that setting up a trust affects serviceability? I have found that it makes no diffence as the lenders require personal guarrantees anyway.

Terryw
Discover Home Loans
North Sydney
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not all valuations come in low. One of my clients purchased a unit and the valuation came in at 20% more than purchase price. The bank ended up giving him a 95% loan with no mortgage insurance.

Terryw
Discover Home Loans
North Sydney
[email protected]

Dino

Offset accounts must be in exactly the same names as the loan accounts (Something to do with ATO regulations).

I agree with Melbear pay off your home loan and then borrow – which sounds like what you were planning to do.

But check with an accountant about gifting money to a trust. This may be a good idea from an asset protection point of view, but if it is a gift, you may not be able to claim the interest. If you loan the money to the trust you should be able to claim the interest, but if you are personally sued the trust technically owes you money so creditors may be able to call in this loan.

Also check this, you may be able to park your trusts money in your personal offset account until it is distributed-saving you interest on your PPOR.

Terryw
Discover Home Loans
North Sydney
[email protected]

Molkenr
Don’t bother even looking. Just go for Dale Gatherum Goss himself. He is located in Victoria (which could result in tax deductable trips!). And you can do everything via mail/fax/phone. I think his web site is http://www.gatherumgoss.com .

BTW Dale is author of that book, Trust Magic_

Terryw
Discover Home Loans
North Sydney
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This is an dangerous strategy right now. Many think that the property market has peaked. And you don’t seem to be in a good fiancial position as it is. Just be very careful and don’t believe anything the real estate agent is telling you without doing your own checks.

Just this week I had a client that had purchased off the plan 2 years ago using a deposit bond. The person does not earn a good income and has a very small deposit and the FHOG. In addition the property is located in an area where LMI won’t touch. The value came in less than the contract price, and due to the low growth and low income that person cannot get finance. They are now going to probably be sued by the developer.

Terryw
Discover Home Loans
North Sydney
[email protected]

it doesn’t really matter that much. Use the Ip equity first and then the home equity. If things go bad you will want to protect your home first.

Terryw
Discover Home Loans
North Sydney
[email protected]