Hi All,
Excuse my ignorance here, but I'm just reading Steve McKnights book, chapter "The Truth About Structuring". Quote "I'm afraid that if you've already borrowed in your own name…..then this strategy will be of little use, because any existing debt you have is deducted from your borrowing capacity".
Is there anything stopping someone from "selling" a property with a mortgage in their own name to a company they set up and become director of, for the purpose of eliminating personal debt and therefore increasing borrowing capacity??
Can it be done?? Is it wise?? The property in question is already an IP (rented out) and is the only debt.
Regards,
Mark.
Mark
Nothing to stop you doing it but is it wise is a separate issue.
Considerations would include Stamp Duty, possible CGT, asset protection (assume the Company would be the corporate trustee of a DFT) land Tax, borrowing costs etc etc etc.
If you are thinking of doing it merely because you believe you can borrow more then i hate to say that is a myth that doesnt fly.
As Trustee / Director you have to disclose those debts that you are standing as Guarantor for and it doesnt increase your borrowing capacity (Odd case where there is benefit).Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard,
So guaranteeing a debt IS the same as having the debt in your own name, contrary to what the book says??
Yes it is and i think Steve has clarified this point on a couple of ocassions over the years.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Ok thanks mate.
Mark.
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