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Discussion in 'Introductions' started by GregR, 13th Jul, 2009.

  1. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    G'day to the investors.
    My name is Greg Reid, I am a finance strategist and mortgage broker and came across this site as I was doing some research for a client (still haven't found the exact answer - a clients accountant gave some tax advice I think is just wrong - wage earner 'buying' own home from partner and then refinancing that home, turn it into an IP and use the funds to buy another home to live in - he suggested the new borrowing was tax deductible).

    I help people with finance concentrating on just two areas, strategies for the multiple property investor to create long term wealth safely and securely and I help seniors (over 60) look at their financial options using a reverse mortgage. One is an interest, the other is more of a service needed in the community.

    I am an investor myself with a number of IP's, so the strategies I discuss, I use myself. I am based in Williamstown Vic. I am always interested in learning more to assist myself and my clients.

    You can learn more of what I do and qualifications if interested, Reid Consultants | Mortgage broker, Williamstown, Melbourne, home loans, commercial finance, reverse mortgages, seniors
    I look forward to joining in the discussions.
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    Welcome Greg, great to have you here.

    My thoughts on the scenario (I am not a tax expert or accountant - just my non-professional opinion):

    1. PPOR owned by spouse A
    2. Spouse B purchases property at market rates with new finance, pays stamp duty etc
    3. PPOR becomes IP, interest on loan deducted

    ... I think that scenario is reasonable from a tax perspective. However, that is not exactly what you described?

    Perhaps you need to give a few more details so we can consider the scenario:

    - what was the original ownership? One spouse only? TiC ? JT ? % ?
    - is the sale between spouses at arms length? (market price with stamp duty paid etc)
    - does the refinance happen as part of the sale, or after the event? Is the original loan paid out as part of the sale?
     
  3. GregR

    GregR Reid Consultants

    Joined:
    13th Jul, 2009
    Posts:
    273
    Location:
    Berwick Vic
    Further Details

    - Original ownership is joint tenant (husband and wife 50% each).
    - The sale would be at an arms length price - using an independent valuer.
    - Victoria does not require stamp duty to be paid on a transfer of ownership between spouses, irrespective of a full sale or just a transfer.
    - The refinance would be after the transfer. Existing mortgage around $310k, property value perhaps $1m. The loan would either need to be paid out (if using a different lender) or incorporated into the refinanced amount. Their accountant suggested the client could borrow 80% against the existing property and use it all as an investment loan. They would then take $500k (or so) of it (wife's share) to use to fund their new owner occupier home.
     
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
    9th Jun, 2005
    Posts:
    4,623
    Location:
    Sydney, Australia
    Ahh - much more complicated than my scenario.

    I'll have to defer to the resident accountants on this one!