A Few Random Finance Questions

Some finance questions from my looooong list I thought I might as well start asking the good folk of PC So here we go...

• I thought it was possible to claim depreciation on any property regardless of age (as long as there was something left to claim of course) but recently read a book where the author was adamant that if you buy a house built pre 20 Sept '85 you cant claim any depr and said to only buy houses built after then, how true is this?

• Read in Rob Balanda's book that there's usually a clause for equity loans that allows the bank to reval at any time? If so, can it be rejected?

• Is it possible for a seller to have a 95% loan on an IP and once I give a 10% deposit, the balance of 90% is insufficient to pay out sellers mortgage on settlement?

• Possible to use peer to peer lending (or any one else) to get cash for a reno and pay it back from the equity gained?

• How easily can equity be split for investment and personal use? If I have $100k equity is it as simple as telling the bank I want $40k for a deposit and $40k for whatever I want?

• I've read about a 6% loan product where you pay 3% and the other 3% is capitalized into the mortgage. What are the risks for doing this? Has anybody done this?

• Is it best to withdraw fully equity and put it in the offset?

• To get 50% CGT discount, can I delay settlement for 9months and then reno for 3months or does it only become mine and the discount start date begin upon settlement?

• Listening to the Property Couch podcast and Ben mentioned "IO quasi LOC", what is this?

• What does it mean when a Mortgage Broker has "Diamond Status"? Can they generally get better rates?

• If someone tries to sue me and I'm the trustee, can I sack myself or the company and fully remove the link to access the assets or does it just make it that bit harder but still accessible?

Thanks in advance!

 

Qus 1
You cannot depreciate the building prior to 1985. However there are plenty of other depreciation items you can claim. For example a 1982 building will be due for a new kitchen, bathroom, carpets and blinds. Go for it.

 

1. Half true. Capital works deductions can only be claimed on capital works after this time.

There may be fixtures and fittings which can be depreciated though.



2. Yes, by not accepting the bank’s offer. But it would be unlikely a bank would draft specialised loan agreements for you unless you are large and important.

3. Yes

4. In theory yes

5. With a phone call with some banks, other banks a new loan application. If you are talking at application stage it is very easy as long as it meets bank requirements – they tend to want to know where the money will be used.

6. Never seen that product, or heard about it Likely the capitalised interest would be unable to be deductible.

7. NO

8. No

9. An IO loan which can be used like a LOC. E.g loan proceeds can be paid back into the loan at settlement and paid from that loan when needed. E.g. Suncorp’s IO loan.

10. Some bank give different status to brokers based on volumes. It doesn’t usually mean extra discounts but faster turn around times. Be careful because it may also mean the broker is just submitting most loans to that lender – which may not be good for the client

11. Assets held as trustee are not assets which are divisible under the bankruptcy act.

 

6. Was a white label product available just prior to the gfc. Ing backed it from memory. There was also a shared equity loan where a percentage of the property was owned by the lender and repaid on sale. Both are no longer available.

 

Thanks all, especially @Terry_w

 

Hello, please see below answers or opinions

• I thought it was possible to claim depreciation on any property regardless of age (as long as there was something left to claim of course) but recently read a book where the author was adamant that if you buy a house built pre 20 Sept '85 you cant claim any depr and said to only buy houses built after then, how true is this? The Built of the property can effect how much you can claim and what you can claim. Have a look at the ATO site .

• Read in Rob Balanda's book that there's usually a clause for equity loans that allows the bank to reval at any time? If so, can it be rejected? With so many different lenders and Banks they have their own polices to follow.

• Is it possible for a seller to have a 95% loan on an IP and once I give a 10% deposit, the balance of 90% is insufficient to pay out sellers mortgage on settlement? Keep things simple.. if you buy a house for say $300K then just ensure you can cover your side on settlement.

• Possible to use peer to peer lending (or any one else) to get cash for a reno and pay it back from the equity gained? Possible but I have a couple of questions... are you willing to pay more in terms of rates but also what security are you providing?

• How easily can equity be split for investment and personal use? If I have $100k equity is it as simple as telling the bank I want $40k for a deposit and $40k for whatever I want? Some instances yes, again every lender has its own policies and depending on the LVR.

• I've read about a 6% loan product where you pay 3% and the other 3% is capitalized into the mortgage. What are the risks for doing this? Has anybody done this? I am not sure what you mean.

• Is it best to withdraw fully equity and put it in the offset? different strategies for different people.

• To get 50% CGT discount, can I delay settlement for 9months and then reno for 3months or does it only become mine and the discount start date begin upon settlement? has to occur when settlement takes place.

• Listening to the Property Couch podcast and Ben mentioned "IO quasi LOC", what is this? Interest only line of credit.

• What does it mean when a Mortgage Broker has "Diamond Status"? Can they generally get better rates? Some banks provide a better service to diamond members for each bank - once can argue that does the broker only use that bank for a reason?

• If someone tries to sue me and I'm the trustee, can I sack myself or the company and fully remove the link to access the assets or does it just make it that bit harder but still accessible? speak to a solicitor but biggest questions is who would want to sue you?

Thanks in advance![/QUOTE]

 

Side note, numbering your questions would've been better! But anyway I can give you my personal experience on one of them:

I'm with Macquarie.

I have a loan package that enables "up to 9 sub-accounts", i.e. 10 splits in total.

My main loan never got touched, it pays for my IP1, this is Account 1

I had something like $120k equity so I did the following:

Account 2 = $50k which I use for whatever I want (I used some of it for some PPOR renos)

Account 3 = $40k which I used as a deposit+settlement costs on IP2

Account 4 = $30k which I used as a deposit+settlement costs on IP3

This leaves me with 6 more splits to organise - via phone - for when my IP1 grows in value and I want to access the equity. IF THEY LET ME. But in theory, that's how it worked for me.

The best part is that all 4 accounts have the same interest rate...

 

Haha yes indeed, realized that after I tried reading Terry's response!

And thank you for yours Thought it would be much harder than what you described but now know it depends on the lender.

Not sure yet but I went to a Boholt seminar once and she instilled the fear

 

Try to forget everything she said about asset protection and trusts.

 

Sage advice there alright!

Bought Trust Magic to read up on it a bit more and figured it's not really for me until the 4th or 5th IP's.

 

Agree with so many new law changes if you are gong to get sued some old laws or tickets does not even matter.

 

I wasn't even considering any law changes here, but just in general...btw, I don't know of any recent law changes which effect asset protection.

 

trust magic, from memory, doesn't really discuss asset protection. It is just a brief and vague outline of some trust stuff.