Hi,
We are currently in the processing of setting up a trust for a joint venture we are doing with my partners sister in-law. She has been to see her accountant (we haven't been able to go yet) and they let her know there are some banks that will still borrow in a personal name even if the name on the title is a trust.
Is anybody able to let me know if you have done this or know about it and which banks do it?
Thanks,
Kate
Not sure what you mean. I guess you mean 'lend' and not borrow. But still confusing.
Why does she want to borrow in her personal name?
(Trust name doesn't go on title, it is the trustee's name that goes on title).
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
Thanks Terry,
We would like to have the loan in our own names so we can borrow with less deposit. Also the accountant did say by borrowing with a personal name and giving the money to the trust to buy the asset you are able to claim the interest on the loan.
Thanks,
Kate
If your accountant said that he is wrong.
I assume you are looking at a unit trust? If a person borrows to buy units in the trust then the person may be able to claim the interest on the loan used to buy the units if the units are income producing.
If you borrow money to give to someone there is no ability to claim the interest because there is no income for you.
If you borrow money to gift to a trust or to settle on a trust then the interest won't be deductible if the trust is discretionary because there is no guarantee that the trustee will distribute to you. A fixed trust is different as there is no discretion, but giftin to the trust won't cut it.
And, what do you mean about less deposit if the loan is in your own name?
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
Thanks Terry,
I believe the trust is a hybrid trust and is both a unit and a discretionary trust, and it will be borrowing to buy units in the trust. Are banks happy to lend money to do this?
Our mortgage broker had told us if we borrow in a trust structure we could only borrow 70-80% of the purchase price, however we would like to borrow around 90%.
Thanks,
Kate
Take great care. If the trust is not set up properly then only a small portion of any interest will be deductible, or possibly none at all.
Finance will be difficult.
Borrowing in your own names won't remove the difficulty in getting finance as the bank will be looking at the structure. It is likely the company will be the owner and the loan needs to be in a personal name so this creates problems for the banks – they are basically lending to a third party who is not the owner.
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
Yes, this is our main concern – I'm hoping someone might have done this before. The accountant said more and more banks are doing it, but I had not heard of it before so wanted to check with someone who had experience.
Thanks,
Kate
Hi Kate
Perhaps your Accountant could tell you the lenders which are doing this as i am only aware of 5 lenders who will lend to a HDT and only 2 of those that will go to 90% lvr.
Your Broker if he / she is experienced in Trust borrowing should be able to point you in the right direction of these 2 lenders.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
G'Day Kate,
You have 3 options:
1. Advise your broker so speak to NAB as they do up to 95% (including LMI)
2. You speak to NAB directly
3. Speak to a broker who has experience dealing with Hybrid Trust applications and have him handle the application submission for you.
Regards
Shahin
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
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