Hi,
I am about to buy my first IP in Australia and am thinking along the lines of putting the IP in my husbands name only as he has the higher
income for tax purposes.
The question I would like to know is what can I do to protect my interest in the property? The loan itself will be under both our names would this be enough protection or would I have to put a caveat on this property. Any suggestion much appreciated.Thank you in advance.
Andrea
Andrea:
A caveat will not protect your asset, it will only serve to advise you if there is an attempt to deal with / on the property.
If you are concerned about puting it in your husband's name then don't.
Though a second Mortgage may help but you would need to get appropriate accounting and then leagal advice on this.Protect from what? and Protect what – your contributions, deposit etc?
Having a loan on the property is largely irrelevant for protection. I would suggest you don't go on the loan as this adds no benefit and only detracts from your borrowing capacity and adds considerable risk.
In family law situations generally names on titles do not matter.
In bankruptcy situations, such as if your husband goes bankrupt, then you would have to argue that you have an interest in the property, via deposit or contributions perhaps with your husband as trustee for your share. But if you were to go bankrupt, then you would be arguing the opposite.
A caveat will protect you in that he will be unable to sell the property or further mortgage it with the caveat in place. It can also show the world that you have an interest in the property which will help if he does go bankrupt down the track.
Having a second mortgage will also give you priority over unsecured creditors, but the mortgage would be your personal asset and not good if you go down.
An idea would be to gift money to a trust and then the trust (discretionary) would lend to the husband and the trust could take the mortgage.
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
Hi Terry and Milton,
Yes Terry my question is aimed at the family law situation. I wanted to protect myself If something (God willing it doesn’t) happened to our marriage down the tract. I thought the 50/50 split on this IP would be hard to do if it’s just in his name so was wondering if there is a form I could apply for that would prove I am an owner too without my name on the title.
Thanks again
Andrea
Andrea,
To clearly achieve your goals, it would be wise to see a family law lawyer.
Who is doing the conveyancing for you? A conveyancer or a lawyer?
As Terry mentioned there are significant disadvantages by going on the loan.
I would have thought that the bank would require your name to be on title if you are also on the loan.
And yes, caveats seem to be glamorised a lot more than what they are worth. It is no more than a temporary lock on the title.Andrea,
Perhaps Andy could do a binding financial agreement for you regarding this property (and any other matters). These can be done before, during, or after marriage and are binding under the Family Law Act (if done correctly).
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
Terry,
Thank you, that sounds like what I need to do.
Much appreciated.
Andrea
Hi Andy,
I will talk to my mortgage broker about whether my name will be on the loan or not. I just presumed it was as we will be getting the deposit drawn down from our existing PPOR loan which has both names on the title. Will also seek legal advice with the lawyer who will do the conveyancing for us. Thank you very much
Andrea
You should, ideally, be setting up a separate loan for the deposit from the PPOR. ie try to have 2 loans secured on this property. One for the non-deductible portion and one for the investment portion. If you just do a redraw you will be at a tax disadvantage.
The new split on the PPOR can be in two names and the new house one name. The money will be used for the investment so the interest on this should be claimable by the husband if he is the sole owner of the new investment property.
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
Andrea,
That's fine. Feel free to field any general queries.Terryw Thanks for the thumbs up.
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