I'm very confused on what I should I'm hoping someone in this forum could help me make a good decision. So here is the situation,
I bought a house(740k wourth low 800s now so agent says) with my Father at brookfield brisbane 1 yr ago – title under both names. Now he needs to go to a retirement home cost about $350k – $370k. So I will purchase the retirement home from the equity in the house, then house title will then be under my name.
If i go ahead with this I may just squeeze in without paying mortgage insurance as i might just have enough equity in the house being 20% if I dont squeeze it in then I'll be up for about 17 000 insurance. I do have another unit that I can get some equtiy from so I might not need to pay mortgage insurance.
If I get all this approved I dont want to live in the house with such high loan replayments so I'll rent it and move back in later when im comfortable with the replayments. With the house rented I can afford it no problems.
I dont really wants to sell the place as im hoping the higher end houses will rises once employment gets better, brookfield has already noticed house prices increasing. I have already spent 20K on stamp duty for the house, buying again and selling again Im loosing more money. I could always sell and get a home and a investment property but I dont think I'll have enough equity for both well not 20% for each anyway.
So should I keep the house? sell it? alternatives? Any help will be appreciated
thanksMhh not an easy one both from a moral and lifestyle perspective as well as financial one.
Firstly bear in mind that when you rent the property out the only interest you will be able to claim will be the interest on the current loan secured against the Brookfield property due to the "Purpose test".
Unless you father is in a position to pay you some rent on the home he is moving into it will not be classified as investment.
Sounds like the original loan was not structured correctly as had the funds been placed in an offset account rather than paying the loan down the interest would have been deductible.
I am unsure as to whether the current loan is in joint names however if it is remember the new loan will need to be in the same format which could cause a few issues in its own right.
Without more hard data difficult one to crunch numbers on.
On a separate note where is your dad looking to move to ?
Richard Taylor | Australia's leading private lender
My dad wants to move back to the redlands.
Centerlink is also giving us a hard time as well. My dad does not want to loose or diminish his pension allowance.
Think he is going to have a problem with Centrelink under the gifting provisions.
Richard Taylor | Australia's leading private lender
You will also be up for stamp duty on transferring your dad’s share to yourself – if that is what you meant when you said “then house title will then be under my name”.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
this is a messy situation as the others have said. i doubt it will be cheap to reverse your position in the short term.
centrelink can be helpful in terms of speaking/meeting with staff called FIS, these are financial information people in each office. it is a free service. they do not give advice but help you to look at all options in your situation.
without all your detalis and your fathers it is difficult to comment but on the surface there will certainly be costs as mentioned by others.
your father wants to move to a retirement village/home. that in its self can be a can of worms in terms of rules and regulations.could you sell the unit to finance the retirement place?
it does sound a little as if you are over committed at present? but time may sort that out.
lesson to all to get advice before setting up to look at all options/possibilties.good luck.
I talked to a FIS and basically if my dad gifts me 90k(10k allowed as gift each year) then he could loose up to $250/month. Centerlink was ok with me giving him that money each month.
Stamp duty that sux: I just paid stamp duty and now I need to pay it again
I saw a mortgage broker today, if the bank evaluates the house at the same price as what I was told then I can get some equity out of my unit and I wont need to pay any mortgage insurance. Otherwise mortgage insurance will cost up to 8k.
If i go ahead with this transaction I'm hoping I'll look back in a couple of years time and see that it was a good move. I'm hoping the higher end house will start rising nicely in the next couple of years.
Thats the one $10K PA but i think you might want to check the maximum over a 3 year period.
Havent got the figure to hand but did a calculation for a client only a week or so ago and their is a capping over a 3 year period.
Richard Taylor | Australia's leading private lender
I think it was 10k each year for 3 years. The bloke told me they d this because there was a loop hold in the system a few years back. Old men were offloading there assets to there family or friends and then getting the full pension benefits. They just ruined it for the rest of us.
The guy seemed really nice and said if we can state our case, my dad might no be penalised by much.
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