All Topics / Help Needed! / LOAN STRUCTURES – ADVICE PLS

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  • Profile photo of dangermouse99dangermouse99
    Participant
    @dangermouse99
    Join Date: 2004
    Post Count: 88

    Hello

    Just wanting to get some advice regarding how my loans/mortgages are setup.

    I have about $65K sitting in a CBA netbank saver account which is useless. Ive setup a CBA MISA account for the $65K to sit off my biggest IP loan ($365k) which ill then drawdown to pay some soft costs (approx $38K) off my next development project. My broker suggested I transfer the funds instead to our PPOR which is under my wifes name (approx $300K) and setup a loan split and drawdown from there instead of the MISA as its apparently a better tax deduction.

    Is this the best way to go? Im open to help/advice/suggestions

    Cheers

    Dean

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Hi Dean

    That makes sense.

    It would bolster your deductible debt whilst lowering your non-deductible.

    My only comment is to ensure you retain some savings for emergency purposes – and it's usually best to store those savings in an offset linked to your PPOR loan.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TheFinanceShopTheFinanceShop
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    @thefinanceshop
    Join Date: 2012
    Post Count: 1,271

    are you talking about putting the funds into the actual loan instead of MISA Offset?

    TheFinanceShop | Elite Property Finance
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    Residential and Commercial Brokerage

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    Yes – injecting into the PPOR split and re-borrowing as a separate split for IP purposes.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
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    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Hi Dean

    JUst becareful when different entities are involved. Transferring from one to the other is possible but just think of classication. Is it a loan or a gift etc.Things can get messy and it will eventually become impossible to work out.this can lead to weakening of asset protection and estate planning problems too.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of dangermouse99dangermouse99
    Participant
    @dangermouse99
    Join Date: 2004
    Post Count: 88

    Thanks guys and Yes Shanin that is exactly right. Terry I didnt think that would matter where the money was coming from? Im just trying to do the best tax effective thing with that money. Can you pls explain. P.S Ill have that money to you next week.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Dangermouse you have to remember that the trust is not you and you are not the trust so think of it as a third party. When passing money money to a stranger you want to make sure the terms are clear. If it is a loan it is still your money if it is a gift then you give up rights to ask for it back.

    Also think of the problems if you were to suddenly die. You family may be clueless about this money and disputed can arise.

    Had a trustee client who was sued by a deceased estate over a loan. The trust contolled by the son claimed it was not a lpan while the executors of the mums estate claimed it was. The executors were duty bound to get this.money back and actually sued the trust. Records were no existant and this is what caused tje problems

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of dangermouse99dangermouse99
    Participant
    @dangermouse99
    Join Date: 2004
    Post Count: 88

    Ok I'm starting to understand. In lieu of what I want to do. Wat do u suggest I do??

    Profile photo of Jacqui MiddletonJacqui Middleton
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    @jacm
    Join Date: 2009
    Post Count: 2,539

    Yeouch. Nothing like a case study to drive the point home.  Nice one for sharing Terry yes

    Jacqui Middleton | Middleton Buyers Advocates
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    VIC Buyers' Agents for investors, home buyers & SMSFs.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    dangermouse99 wrote:
    Ok I'm starting to understand. In lieu of what I want to do. Wat do u suggest I do??

    May have to work this out over several posts.

    FIrst, who is the owner of the cash? You, spouse, trust a , trust b etc? And where is it sitting now?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    I just reread the initial post and that is generally a good idea what the broker suggested. But because there are multiple parties we need to consider a few more issues.

    When injecting money into a trust you need to consider the loan v gift issues outlined above. You also need to consider taxation aspects too.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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