Hi everyone,
Just wondering if anyone can help me as I am a bit lost in the loan world.
I have investment property A in QLD, which is all paid for by my parents, and they get the monthly rental income of around $3000.00. The deal is that my parents get all the rental income, however, I get to pay more tax for a number of years because it is under my name.
I am earning about 140K which means paying about 38%tax this year.
Later on, I gathered enough money to purchase another investment property B in QLD, and paying mortgage. Bought for 300k, paid 100K, and got another 100k in offset account.
I want to buy another investment property C in NSW for about 500k, using one of the property as equity. I know that I would get a loan approved regardless, however, what is the best way to structure my loan to get the best tax benefit?
I am thinking of using investment A as equity to borrow money to fund my property C, however, is it possible for the rental income for both A and C to negatively gear against the borrowing interest? a friend mentioned line of credit vs cross collateralisation. what's the pros and cons in this particular situation?
any help would be appreciated
Feel free to email me for my 10 reasons why you would not cross collateralise your loans.
To be honest i cant think of one reason why you would do so. Of course your Bank will tell you how much simplier it is and you have 1 loan ect but they would do of course as they have added security.
Yes why would you not establish a LOC or interest only loan on one or both of the existing IP's and use these funds as deposit for IP 3.
The security offered has no bearing on the deductability as the underlying test to qualify is the"purpose" of these funds.
Then either using a separate lender take out a standalone investment loan against IP 3.
Subject to the assessed values you should be able to gear to 100% plus costs and still retain your 100K in your offset account.
Your mortgage broker should be able to show you differing scenarious.
Richard Taylor | Australia's leading private lender
You must be logged in to reply to this topic. If you don't have an account, you can register here.
