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  • Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Are you looking to buy in the SMSF or in your own names?

    If a SMSF it may not be a good idea to buy without finance as the property cannot be later mortgaged or used as security for further investing.

    I presume the apartment is small – is that why you cannot finance?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    You cannot contract with yourself so you would have to make a declaration of trust. Shares – need to pay duty in some states. If the trust owns property in QLD could be a lot of duty.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Post Count: 16,213

    Asking all the experienced/hardened investors out there for an opinion.

    I have an opportunity to gain an instant increase in equity of close to 50% on a deal due to it being well below market value. However the immediate/short term on-selling prospects aren’t too great due to the particular market being tight, it has a poor rating on the boomtown app etc

    So the question is, Is equity worth it if the immediate on-selling prospects aren’t too great? Or do you need both to validate the risk?

    Thanks for any feedback and in sight

    Sounds like you are not really getting instant equity if you cannot resell it qiickly. think carefully.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    You have a LVR of less than 50%. So just set up a new split secured on the old PPOR and use this for the shortfall of the new PPOR – make sure you don’t incur any LMI as there should be no need for it and it won’t be deductible. Also note that the interest on this new split won’t be deductible because the money is being used to fund the new PPOR>

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Assuming you will need a loan on the property why not use the lenders valuation

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Post Count: 16,213

    you can have an offset account on an investment property.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Not unless it was a 3 way marriage.

    • This reply was modified 9 years, 11 months ago by Profile photo of Terryw Terryw.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Post Count: 16,213

    From a tax perspective you should be borrowing to invest rather than using cash as you may need the cash for a private expense in the future and don’t want to tie it up. e.g. a new PPOR.

    Where you should put the cash will depend on return and who owns the property. An offset account on a property owned by a spouse on a lower income may be the better option as this cash will reduce interest which means a bigger income on the property. Alternatively you may think you can get a better return elsewhere other than a guaranteed 4.7% (or whatever rate you have getting on the home loan).

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi,
    Thank you to all who may respond!
    Does “SMSF” (Borrowing to create a property profile) outshine the “Discretionary Trust”?
    Which strategy is better to create a property profile (may be negative gearing and at age around Mid-High 50s ) after comparing with all the setting cost, on going fees and the tax benefits….etc??
    What if the risk that government may change the policy in future?
    What do you recon?
    Any information would be much appreciated. Thank you.

    I reckon you need to learn a bit more before you start asking these sorts of questions/

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Post Count: 16,213

    Yes, possiblly. But are you willing to risk the $400 per hour for a lawyer?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    You must be rich?

    $55k on a car is crazy – what will it be worth in 5 years?

    If you purchased $55k worth of vangard index fund what would it be worth in 5 years, and how much income would you have received?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Post Count: 16,213

    How could it be otherwise?

    If you are buying a $600k property you have to pay $600k!

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Post Count: 16,213

    It looks like the interest rate is 6.87% which is higher than now by about 2% so this is good to factor in a few rate rises.

    capital growth rate is 7% which is pretty high.

    rental expenses are about 30% which is about right. Is the rent realistic for the area?

    The software used is the PIA – not not pain in the arse, but property investment analysis by somersoft.

    What sort of ‘advisor’ gave you this? Are they also selling the property?
    There is no licencing needed for this sort of stuff so anyone can do it and it is unregulated.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    So assuming I claim my first property as PPOR and then sell within 6 years I will avoid paying CGT. Could I then claim my new property as PPOR after the first one is sold and avoid paying CGT on that as well?

    Not for any overlapping time.
    but if you sell the first within 6 months of buying the second you may be able to claim the exemption on both.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
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    Post Count: 16,213

    All title holders must be borrowers or guarantors of the loan.

    But additional non owners could also be on the loan. However in Australia the general practice of the major banks is to allow non owner spouses on the loan in addition to the owner spouse. They wont allow this for non spouses = spouse includes defacto.

    The ATO allows all the deductions to fall into the hands of the owner of the property so adding a spouse on the loan will not effect deductibility – generally.
    But this should not be done unless the owner spouse cannot qualify for the loan. 2 main reasons:
    1. Doubles risk
    2. Hurts future serviceability.

    I have seen 1 owner but 2 on the loan countless times where the 1 owner can qualify on their own. I have unravelled many of these to improve both asset protection and serviceability.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Terry,
    Say that again, property in my name but we can both be borrowers? Will that help for future loans or make little difference as I’m still 100% accountable for the loan?

    Yes a non owner spouse could also be on the loan. Deductions will fall to the owner.

    It s not a good idea to do this unless you cannot borrow on your own to get the property as it will double the risk and hurt serviceability

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    You don’t want to reduce future IP borrowings but the non deductible PPOR loan. Don’t worry about making the IP cashflow neutral by depositing cash in the offset as this will cost you money in more non deductible interest.

    What you want to do is keep the cash in the IP offset temporarily and when you buy the PPOR work on a debt recycling strategy.

    Don’t forget you can own the PPOR in one name but have both of you are borrowers.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    @terryw
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    Post Count: 16,213

    There is also Propertunity in Sydney

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    1. Yes and yes, possible double duty. Will depend on the state the property is in and the circumstances. could be tax if there is a fee for the nomination or option agreements etc

    2. no.

    seek specific legal advice.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    $100,000 property
    $80,000 loan 1
    $24,000 loan 2

    Wait 2 years and then refinance loan 2 into loan 1. Free up $24,000 cash to use for the PPOR purchase.


    IN 2 years the property may be worth $140,000. (maybe be a bit longer)
    80% x $140,000 = $112,000 = enough equity

    So you just increase loan 1 to $104,000 and use the $24,000 released to pay out the sister.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

Viewing 20 posts - 1,781 through 1,800 (of 16,319 total)