My wife and I have just had a baby. She is no longer working and has the mortgage for the current property we live in and and investment property as well. To receive the tax benefits I was going to buy the investment property at market value, buy a new house to live in – current one too small – and buy our current principal residence from her and then rent it out. But the loan required would be beyond my means to meet. Would anyone be able to provide any ideas at a better way at going about it. i.e not buying current principal residence and instead simply renting it out. If this isn’t the right forum for this sort of question I apologise in advance.
First of all. Congrats with the new baby!!! Hope everything turns out well for you all.
Now lets get down to business.
hmmm… Is there any reason why you guys can not consider going jointly in the application for your new home or even for all of them?
Is she receiving any Child Care allowance from Centrelink?
Please be aware that you might also be up Transfer of Land stamp duty which can be a big fee depending on the purchase price.
in your thread you said you arent able to meet the servicability who told you this? a Finance Consultant? Broker?
A farfetch option could be to sell up that investment & the one you currently living in and use the profits from the sale to buy a bigger house for the family. This will save alot of money as you dont have to worry about 3 home loans in your name, and have the hassle of paying all the lenders fees and stamp duty fees applicable in purchasing the houses off her. Then if their is enough equity later on in the year, then consider the option of purchasing a investment
Alot of option and alot of decisions. If your able to help me out with my questions and think about my farfetch option then we can get the ball rolling.
Joshua McEwen
Finance Consultant – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieI was abit concerned about the stamp duty payment and investigated abit more, and i found that in WA you are exempt from stamp duty (transfer of land) if you are purchasing a property from your spouse. If your in a de facto relationship you have to be with her for more then 2 years. However, you must be both on the title, you cant go from your spouses name only to your name only, it must be transferred into both your names as joint ownership.
As your profile says your in Melbourne, VIC. i took a look at the whole Duty Act 2000. And here is an extract of it concerning marriages and relationships…see if this helps you
43. Marriage and domestic relationships
No duty is chargeable under this Chapter in
respect of a transfer of dutiable property from one
person to another person, or from two people to
one of them, or from one person to themselves
and another person if—
(a) the people are spouses or domestic partners
of each other; and
(b) no other person takes or is entitled to take an
interest in the property under the transfer.Interesting i might add.
Joshua McEwen
Finance Consultant – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieJosh, Thanks for the congrats and thanks for the detailed response, people can be very generous with their time on this site.
I’ll give you a bit more info.
1. We are married
2. My wife bought our PPOR for 90,000. It is now valued at $350,000. We owe $40,000
3.Investment property was purchased for $220,000 and now worth $300,000, currently tenanted at $230 a week.
I also own a IP which was purchased for $167,000 now worth $350,000. This is tenanted and rented for $260 a week. We got to this position with little fore thought and has generally been on the back of my wifes gumption.
But to move forward our situation now requires a bit more thought.
4. We don’t want to sell the investment properties as they are doing well(mine will be positively geared in a year or so) and we actually are looking at increasing our portfolio.
5. If I was to purchase at market value I would need a loan(my calculations) of around $1,050,000.
IP 1 $350,000 originally wifes PPOR
IP 2 $300,000
new PPOR 400,000 plus(property aint cheap around here)
And even though alot of that would be paid back immediately on settlement I would still have a loan repayment of around $680,000.
I suspect this loan could be tax deductible although a percentage would be used to purchase a new PPOR the majority would be used to buy IP’s
I understand that we would then have added to our portfolio and all 3 would be rented out but i still need a loan of around that size.As I only own one asset i’m not sure the banks would give me a loan of that size.
Anyway thats our situation. Any advice at all would be great and thanks again for what you’ve already given us.Danield,
Would it be more feasible just to add your name onto the home loans existing at the moment. its just a Internal Re-finance where we payout her loan then make a new loan for the same amount but just in both names. This way you dont have to come up with $1,050,000 to pay her out and be on the title. You can add your name to both those home loans pretty easily. She can also do the same for your own investment property.
In regards to the title deeds. The settlement agent will arrange the deed to show both names on the property as joint ownership. However, you might have to pay some stamp duty on the investment properties but this will be in the hands of the settlement agent and they will disclose the nitty gritties of the applicable fees and charges.
So what im basically proposing, is to add your name onto her existing loans by doing an internal refinance. Sooo… for example, that your wife’s loan was $90,000. Do an application in both your names for the amount of $90,000 to payout her loan and transfer it into both your names, and do these for the other two so that everything is in both names. you have enough equity to pay for cost of all this however comes down to servicability. Lender will have their charges aswell
And settlement agent will arrange for all the properties to be in both your names. However costs will incur here however, speak to the agent and they will divulge the costs incurred.
Hope that makes a little sense.
Joshua McEwen
Finance Broker – WAhttp://www.prestigeloans.com.au
Brokers Lic 1297
Licensee Brett ChristieThanks Josh, I’ll look into it. It’s certainly given me a start point
Hi,
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[cigar]
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