Hi, I'm new here. Would love to get your ideas about how we can best manage in our current situation: 1 PPOR under my partner's name 1 IP under my name We would like to get another IP, but due to serviceability, neither of us can buy on our own. Is it possible to just have his name on title, but both of us service the loan? If he is the one on title, can he claim all the interests and expenses 100% rather than 50%? Or other suggestions?
Im not a tax guy so seek specific advice please Deductability flows from ownership, so even if the loan is in 2 names the deductability will be 100 % in your partners name if the title is also in that name. I would also get some structured finance advice........... if you are building a portfolio long term, going joint "too early" may cause limitations later on ta rolf
The question says "neither of us can buy on our own"" then asks about one name on title. Think it through. You may be talking about 2 on title and two on loan I assume. Lenders will often want both borrowers on title - Not always. Watch for cross loans too !! If so then you may want to address 1 title and 2 borrowers. For tax purposes GENERALLY the name on title determines tax treatment NOT the parties to the loan. If one person is on title and 2 on loan only one gets the tax outcomes. If its 2 on title and one on loan that is very unusual. In rare cases two owners can each obtain a loan and each loan is specific to them. But all other income and expenses are 50/50...Or you could use tenants in common in some other %. eg 1% / 99% Personal tax advice ? Land tax impacts also need consideration as well as servicing impacts on both borrowers.
Thanks Rolf! The plan is hopefully after couple of years, his serviceability will increase. I will then discharge from the loan and he will be the solo borrower for that IP (he is the one on title). My serviceability will be back to where I am. But not sure if this strategy is feasible.
That is a strategy. But dont assume it will happen. If values stall or fall the problem may persist and affect things for a longer term for both borrowers.
Thanks Paul. We plan to do 1 on tile and 2 borrowers. He will be the one on tile and he can have all the tax benefit. I already have my own IP for tax deduction. Then after a couple of years, hopefully his servicability will increase to service the loan by himself, I will then be discharged from mortgage. My serviceability will be back to where I am. Hope this makes sense. However, we don't want to do it if it will cause more issues down the track.
Plans are good for sure Life is what happens to you while you are making other plans - Lennon If you can find a way to exclude that risk why not do that as a guaranteed outcome now ? ta rolf
Tax Tip 58: Two on title One on loan. Who claims Interest? Tax Tip 58: Two on title One on loan. Who claims Interest?
They may be able to. Some are more experienced in the area of structures for building portfolios than others. Plenty of GREAT brokers from Melbourne that post here that can help you with your decisions ta rolf
Tax law is complicated. Just think what the borrowed money is used for and that will usually show where the deductibility lies.
