Hello everyone
Me and Dad want to go together in a deal in buying this house..pretty good deal. I only want to put in say 15-20% what will be the best way to structure the whole thing.
Thanks
Hi Cornel,
If you are deciding to do a Co-ownership with your dad, there are 2 typs of ownership that can be taken out on the property.
Joint tenancy and tenancy in common.
With Joint tenancy which is more favoured by people, the reason being is, if one of the persons on ownership of the property die and there is a Will already in place, the survivor of the ownership of the property will have full ownership, regardless of what the Will says.
With the tenancy in common, you can control the type of amount of share in the particular property you want to purchase, and if you were to die, who you want your share of the property to be left too.
Another thing with Joint tenancy and tenancy in common is that you can sell your share to a third party with out the consent of the other co-owner.
Cheers,
sisOkay cool thanks SIS….does this means that we have to create a trust or not? or is all this stuff just things you fill out on the bank forms?
Cornel
Though when taking out the loan, it will be the same as taking the loan out as an individual, though first check up and see what you want to do.
reason being is you can have the property in just your name, if your dad, wishes the contract to be like that, but have the loan taken out against both of you.
Though depending again on what taxs benfits you are after, and whether your after some taxs benefits, it might be better to get your father to either gift you more money into the loan or also be the borrower and guarantor of the loan at the same time. Which will help you, in putting as little as possible into the purchase of this property.
Cheers,
sisHi Cornel
This will be on the contract form, but its nothing to worry about, ask your dad, what he wants to do with it future wise, he might want the whole property in your name and just the loans take out in both your names, if this is the case, you control the asset, but also get tax benefits, were as your dad will still get tax benefits, but just no control over the asset.
Though, theres no need for trust, unless maybe your dad is thinking of retiring soon, again the trust could come in handy and give you tax benefits again.
Cheers,
sisHi SIS…well dad’s got enough cash to pay for the place cash…so we can have a quick settlement and maybe get the place for a lot cheaper….that’s the plan anyway. Then I will move into the place as my house doing the renos etc then renting it out after a year or maybe sell the place for a good profit. I think we will prob want the house in both our names but he will need more control coz he will be putting in all the money and I will just transfer the money I am putting into the deal into his account. So there won’t be any loans or anything like that. I am just thinking from the legal side and ownership side of things….how to structure the deal with him.
Hi Cornel,
If the property is going to be positivly geared and the property is going to provided +ve cashflow, it would be best then, who has the smaller income to try to claim, as much back as possilbe on their tax return, so that more returns can be gained.
Though, best to find out, how long, your dad and you want to keep the property, and if he is going to retire soon, it might be better to purchase the property in a Trust.
But first speak, with your dad and find out what he wants to do with the property, and if its nothing long term, then find out what tax benefits he wants. Because in a deal like this, there can be some huge tax benefits and taxes,
Even if this property is going to be an investment property, but also that fact that it will be payed out in cash. Which will mean straight revenue and huge cashflow incomes. Best thing, is really talk to your dad about this, if its going to be bringing in straight cash every week, or else the tax man will try to take a huge chunk of this cash.
Cheers,
sisWell nothing will be coming in from the property until it’s renovated and that will take prob all year for me to do…do a bit every weekend. But I guess we will need to find out and sit down and talk to see if this will be a quick buy and fix up or buy and hold deal. Anyway….this storm we had in Brisbane was just crazy 10 Min ago…trees on road crazy
Hi Cornel,
I think you should create a trust before you start your investing career. As this is going to very +ve flow property according to me trust will be good idea to buy property but you better talk to a accountant.
accountant should be good accountant not $50 tax return accountant.
Cheers
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PropertyGuRu
I want to be billionaire! [] Hi Cornel,
I have to agree with Property Guru…. I have set up ad trust and a company as trustee…. this has set my future in stone and although it cost me a pretty penny …. I see it as my insurance policy that will secure my future. – end of the day … it all comes down to your own values and priorities.
Cheers
Kiwi[:o)]
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