All Topics / Help Needed! / Family trust bank loan setup – which account?

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  • Profile photo of bb8bb8
    Participant
    @bb8
    Join Date: 2009
    Post Count: 30

    Thanks Terry.

    I forgot to clarify:

    The offer of 80% at IO for 5 years and additional 10% at P+I to be paid down in 3 years would not require any lenders mortgage insurance.

    Using a round figure of 450,000 property cost this means I have to pay down 45000 in principal in 36 months.

    Within the family trust, I understand that the interest portion of the 90% total loan is considered a “loss” to be offset against “income” – being the rental income.

    However I wonder if the principal payments (45000/36= 1250 per month) is also a “loss” to be offset against the rental income? I understand the answer is “NO” in a normal personal investment setting but what about in a family trust?

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

    BB

    I trust can't claim principle either

    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 bb8bb8
    Participant
    @bb8
    Join Date: 2009
    Post Count: 30

    Thanks Terry

    That is a good thing then if the principal part of the loan repayments is not considered a deduction/loss which will offset the rental income – otherwise I will go from neutral/positive geared within the trust to negative!

    If this is the case then it’s prob worthwhile considering this 80%IO+10% P&I without LMI, so I won’t have to fork out existing savings to cover the 10% myself upfront.

    Have appointment with accountant next week to double check all the the issues/questions so far with trust loans. Any other curly questions I should be asking the accountant?

Viewing 3 posts - 21 through 23 (of 23 total)

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