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105% loan, savings used for deposit - deductable?

Discussion in 'Property Finance' started by inertia, 8th Sep, 2016.

  1. inertia

    inertia Well-Known Member

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    Howdy,

    So I need to pay a deposit on an IP, but my refinance is not yet complete. If I draw a cheque from my savings as the deposit, when it comes to settlement, can I pay the remainder from the loan funds, and also "pay myself" the deposit amount back in to savings... without deductibility issues?

    Cheers,
    Inertia
     
  2. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

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    A straight forward NO.
     
  3. York

    York Finance Broker Business Member

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  4. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

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    Think about alternatives - borrowing from someone else and then refinancing this loan for example.
     
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  5. Simon Moore

    Simon Moore Residential & Commercial Mortgage Broker Business Member

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    Borrow against cash in a term deposit.
     
  6. Perthguy

    Perthguy Well-Known Member

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    Is a deposit bond possible?
     
  7. inertia

    inertia Well-Known Member

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    That's what I thought.

    This process can be extremely frustrating!
     
  8. inertia

    inertia Well-Known Member

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    I guess anything is possible! I'll look into it.

    Cheers,
    Inertia.
     
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  9. Scott No Mates

    Scott No Mates Well-Known Member

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    Short term pain - credit card cash advance from a clean card with no other charges
     
  10. dabbler

    dabbler Well-Known Member

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    No.

    If you have a PPOR mortgage, use that.
     
  11. tobe

    tobe Well-Known Member Premium Member

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    Set up the Finance right the first time next time. Borrow 25% first, pay the deposit from that. Then organise 80% against the ourchase.
     
  12. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    Pay the deposit with cash from your savings if you don't have an alternative.
    Get the refinance done as quickly as possible during the settlement.

    Either:
    Give the agent a second cheque for the deposit and have the agent give back your original deposit.
    or
    Pay the full amount at settlement, not taking into account the deposit that's already been paid, thus you get the original deposit back.
     
  13. Redom

    Redom Finance Strategist - Sydney Business Plus Member

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    Deposit bond should do here - won't use your savings. Refi will need to be completed prior to settlement though, and then can use those funds to pay the entire deposit.

    Will come at a fee though, deposit bonds can be pricey depending on the size of the deposit required. Perhaps negotiate a smaller deposit if possible (sometimes they don't mind this).
     
  14. dabbler

    dabbler Well-Known Member

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    Yeah, the whole deposit thing can be a real PITA seeing so many do not understand RE transactions, I have lost count the amount of times I have tried to explain to a RE why a deposit of 10, or 5% or 500 bucks is all the same if I wont allow release.

    Trying to deal with most humans is a mind bending experience at times :)

    Best to line your ducks up prior, otherwise there are some good suggestions above, just do not explain to the agent what your doing.
     
  15. Terry_w

    Terry_w Structuring Lawyer and Finance Broker - all states Business Member

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  16. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Member

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    Simple strategy is to seek contract with a minimal deposit paid from savings then max the balance
     
  17. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Exactly. In SA it's still fairly common to use $1000 deposits for most non higher end properties. If an agent is giving you strife - explain that you're looking to hold onto as much as possible for tax purposes. Worst case offer a deposit bond.