How to release equity – without selling?

Ummm your doing this all wrong, for the reason you want anyway….

1. Stamp duty is payble for the transfer. ( depending on state)
2. Since you want to buy a house in joint names – it “MAY” ( i say may because i dont know the financial figures) not make a huge financial difference,– what your doing is really shifting from NOT having a mortgage to having a mortgage under your BF’s name- so really your Joint serviceabilitly has decreased but your join “savings” has increased by the sales.

Solution:
It’s a simple solution, ask for a equity release and use this money (cash out) as a deposit to purchase your home.
IE, Unit worth $200,000 —- Approach bank or broker to organise a equity release of say 50%— so $100,000 cash will be given to you to fund the home purchase.

Regards
Michael

Just out of curiosity,  will the bank give you loan of 100k or your cash out (no loan) in her case?

?? yes bank will cash out 100k- WITH a loan….( apply for new loan- cash out equity release loan)

Regards
Michael

Jo,

The debt would become deductible not because it is negatively geared, but because they borrowing was used to purchase an income producing asset.

Borrowing 100% plus costs would free up more money and create bigger deductions.

Hi Brett

Regretfully you cannot just transfer the equity from 1 property to another.

What you could however do is:

1) Look to purchase your wife's share (or vice versa assuming her income allows for this) in the current PPOR and then claim a Tax deduction on the interest once the property becomes available for rent. She in turn uses the funds to invest in your new PPOR.

2) Both of you look to sell the property into a Unit Trust structure and borrow 100% of the value (or 80% to avoid LMI) and use the net funds to do likewise.

Course as has been stated previously there are considerations which would include Stamp Duty on the Transfer (this will depend on which one of the 2 strategies you look to adopt) which would need to be weighed up against the interest savings.

Then you need to factor in the annual land Tax which maybe greater by holding the property in a Trust structure.

All in all on the numbers you have mentioned i think it is certainly worth thinking on doing something.

Get your current Bank to do the numbers for you.

Cheers

Yours in Finance

Thanks Richard and Terry,

I have done the calcs based on my wife selling her share to me and the interest deductions would be about $10k per annum but cost $12k in stamp duty.Therefore would save money a little after 12 months.

I have not looked into a trust structure because my understanding is that losses cannot be claimed against personal income. Therefore, the loan interest could only be used to offset income from the property but not to save income tax if it is negative geared.

Have either of your heard of a special tax ruling that allows you to withdraw equity if you can prove that you are moving because of work or a transfer. I paid an accountant about $500 about 12 years ago for info relating to a similar situation. I have lost contact with the accountant because I moved and I have not found anyone else that has heard of it.

regards
Brett

This whole thread neglects to caution against sexually transmitted debt.

Get some legal advice regarding asset protection before optimising your tax position.

Cheers,

Rob