I own a software development company and most of my expenses and income goes through that. As a result, my own personal income is a low $30k. I don't own any other assets or propery of value in my or the company's name. The company has been around for 10 years, ABN and GST registered. No debts and about $60k in the company bank (nothing in mine). $80k in debtors.
I am looking to buy my first investment property. It is going to have to be low doc. The property is $310k, so going to use the $60k for the 20% deposit.
Can I get some recommendations of whether I should get the loan in my name or the company? If I do it through myself I have the problem of income declaration. I know the company doesn't get the CGT benefits, but that is not a factor here because it's just to get started and I'll get proper structures in place going forward.
Thanks for you answers.
Darren.
Hi Darren
Firstly welcome to the forum and i hope you enjoy your time with us.
You say the loan needs to be Lodoc as all of your income goes thru the Company however there iis no reason why the loan cant be done full doc as log as we can follow the money thru the Company and wiith you being the sole Director / Shareholder.
Of course if for some reason this isnt going to happen Lodoc in your own name will be slightly easier and may require slighly less additional documents. In the main the days of merely stating an income to make the deal fit has been and gone post NCPP.
Ease of finance verses the name/entity you want to buy the property in maybe different and needs additional consideration.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
For asset protection reasons you wouldn't want the company to own the property (tax reasons too!). Also make sure you cover getting the $60k from the company bank account. You can't just use it, you will need to get the company to make a dividend or some other payment or you will need to draw up a special loan agreement.
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
Thank you both for your thoughts.
I think I'll do a lodoc in my name and cross my fingers it works
It's all a bit messy…Terry, I know about the loans needing to be on a commercial footing so that's ok. It won't be via dividend, so that leads to a question though – if I take out the loan from the company and then get charged interest (as you're supposed to), is that interest tax deductable now that it's against an asset?
Damn I need to find a tax advisor, financial planner and accountant. I think my days of doing all this myself are coming to an end… I think that shall be my next post…
Thanks,
Darren.If you borrow from the company and then use the funds for deposit etc on an investment property then the loan would be investment related and the interest would be claimable by the owner of the property. But the company would also be receiving interest as income so this would be taxable too.
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
Lodoc in both Company or personal name is still very much alive albeit the amount of documentation varies between lenders.
Just have to bear in mind if the lvr is over 60% you will end up paying LMI.
Also some good interest rates around for Lodoc again so some appetite is coming back.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
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