Home Loan Recommendations

sorry on a side note, does anyone know a good Accounting/Taxation Adivsor in Melbourne Metropolitan area?

 

This is getting more complicated as details trickle out in your posts.

The very reason why you should visit an Advisor who can assess your overall situations.

Cheers,

Rob

 

let alone if your parents gift you any money (over the value of 10k per year or 30k in 5 years) the gift is still counted in there asset cals and therefore (id imagine) would be excluded from getting part pensions as they will have an addition $350k of assets counted...

As rob has said, i think its now time to get real professional advice as its impossible to know all the circumstances and how it works best...

skimping out on advice now may cost you a lot in the long term....

 

In terms of centrelink payments, what's the best way forward in terms of ensuring that my parents can get them say in a years time?

ROB G. - About arms length transactions in your post above...I will be purchasing another property as per any other investor....so why woulnd't it be arms length?

 

Also,

Would you think it's more beneficial to just claim the transferred property as my PPOR and claim First Home Owner's Grant....

Would there be any issues if the consideration I gave my parents is less than market value?

 

I think everyone is forming the same opinion as more questions are raised. Seek some professional advice. If it costs you a few hundred bucks you'll be well ahead compared to the risk of confusion you may cause yourself, with gift/deductibility/CGT/FHOG/PPOR/IP etc. etc.

Good luck !

 

Is there anyway you can claim the advice (i.e. advisor fees) back in tax deductions.....???

 

Your financial advisor's assistance is tax deductible as long as you can show its related to activity trying to earn income, as far as I know. But let's face it, if the deductability of a fairly small fee to get professional advice is a clincher, might be worthwhile reconsidering dealing in such relatively large sums of debt.

 

Yes you can claim FHOG...

however would be in ur best interest to purchase the property at current market value and recieve a gift back from your parents for the 350k....

only issues if less than market value would be the future deductibility so its not a huge issue except for maximising future tax deductions

 

there is no best way.. your parents have made money, therefore they shouldnt be able to gain additional benefits from centerlink... laws have been put in in place to prevent this, remember the govt are smart...

gift or purchase at market value theres not possible to get the money out of there name, your parents just have to deal with this.. i think there benefits are reduced by $1.50 per $1000 they have in there name, however check this with centerlink....

if you purchase at market value then yes it will be a arms length transaction, but if all your doing is taking over their mortgage its not arms length

 

I'm still not really understanding the benefits of purchase at market value (there's no way the bank will loan me $500k anyway)........for us, the easiest way forward would be to just take over the loan, which is worth $150k and pay stamp duty on the $500k.

Can you also elaborate a bit more on the "maximising future tax deductions..."???

 

In terms of arms' length....i was referring to future investment property purchases.......would I be able to claim full interest on an interest-only loan if I use the unused portion to purchase a PPOR in future.

I'm starting to think that I might as well declare this transferred property as a PPOR initially and then live in there for 6 months (or is it 1 year???...is there a difference cause i'm hearing conflicting things from different people)...use a standard Principal + interest home loan....claim FHOG.....then after 6months/1year....formally lease it out and refinance to interest-only and use it as an investment property. Is there anyway I could use an interest-only on a PPOR?????......wouldn't this send mix messages and create more concerns around tax time?

Alternatively, Do people recommend me use a principal + interest...rent it out for 6 years and then move back in for 1 year and then lease out for another 6 years....and so on...to get that CGT exemption? Or is it not worth it on a property which will mostly be for investment income-producing purposes.

 

No you didn't missunderstand that's the benefit of an offset.
The spare money sits into a savings account so withdrawing it is not new borrowings it simply stops offsetting the loan amount and the increased interest will be tax deductible. Mate understand how the ofset works and borrow 100% if you can. Some lenders let your parents go in as guarantors to the loan and let you borrow more. Look into it.

This is a VERY BIG benefit to you because if in the future you decide to buy a PPOR you simply withdraw the money and you put it into your PPOR and the IP loan is maxed out. If you are not going to buy a PPOR, then it doesn't matter, later on you can refinance and access the IP equity. But if you do buy a PPOR you will be kicking yourself forever for not maxing this IP loan from day 1.

Centrelink have their pension eligibility test going back a few years from the application date for this exact reason. People used to dispose their assets the last minute in order to get the pension when they were wealthy enough to support themselves. I don't know what the eligibility time is these days. I believe it is 7 years from the disposal of an asset but to make sure go to their website and check.

Cheers

 

Why do you want to complicate things?
What's wrong with the good old interest only loan with 100% offset?

 

You parents might act as guarantor, or alternatively joint names on the loan to assist with servicability requirements.

The deductibility will normally follow the legal name on the title - assuming there is no Part IVA "scheme".

Don't forget that if you deposit any money into the offset account then you interest bill will be reduced.

Cheers,

Rob

 

So do you recommend me claiming PPOR/FHOG on the transferred property or should i claim it as an investment property....then purchase another investment property 1 year later (claim it as PPOR in the first 6 months + get FHOG) then rent it out.

I'm not sure which avenue is better.

 

no one is recommending anything... recommending is financial advise which non of us are qualified for....

do you want to kick the current tenant out? if not then you dont claim the FHOG...

as for time value of money id be taking the FHOG on ur first transaction rather than the 2nd... but thats only my opinion...

 

I'd claim the FHOG later.
Remember that to claim it now you will have to kick the tenant out,
move into the property, connect essential services into your name
etc and ofcourse for that period you will lose rent so it's hardly worth the effort.

 

Here is an article on offsets with examples on how it works.
http://www.dover.com.au/docs/guides/TheDoverGuidetoMortgageOffsets.pdf

Read it and you will soon realise why you will be kicking yourself if you didn't borrow as much money as possible and didn't park your cash into an offset.

Read the section with the title "The Equity is Stuck in the Original House and Taking the Equity with You"

 

Thanks for the article BV, can you please see if I understand correctly if i apply it to my situation...

* Borrow Interest-Only to the max possible (i.e. $400k or 80% of the transferred investment property value)
* Interest will be totally deductible on the used portion (the unushed portion leave in offset i.e. $200k)

Q: Should I be putting all my money into the offset (i.e. other savings as well) to reduce the interest, or should I just leave it there and claim it back in deductions. While earning interest seperately on the other savings accounts? Though in thinking, i should put all my money into the offset cause the interest rate will be 9% as appose to 7.5% for a regular online saver.

* Latter down the track purchase a PPOR (let's say around $400k). Use the unushed portion in the offset (say $200k + $20k in savings = $220k)....then borrow the remaining $180k. The interest on the $220k, would be fully dedictible even if i'm purchase a PPOR right? The interest on the $180k would not be dedictible.

Q: Should I refinance the interest-only loan to encompass the value of the new property. Or should I take out a seperate loan (with the same bank or external?) and used the unused money in offset as a deposit.

How best can I avoid cross-collaterisation. Would having a seperate loan help? Also, the new loan amount of $180K...is there anyway I can make this deductible (i'm assumining not because it'll be used initially as a PPOR)?

And should I also go interest-only on this $180k loan?


Q: If I was to then purchase a 3rd property in say 1-2 years time after that, which structure will give me the best platform to afford this new property.

The article tells us to repeat the process....so does that mean that instead of getting just a $180k loan.....I should be borrowing up to the maximum again....i.e. $320k (80% of $400k) and park the unused one into offset again?

Thanks.