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Loan Structure. Help needed!

Discussion in 'Accounting & Tax' started by Bris Jay, 7th Apr, 2016.

  1. Bris Jay

    Bris Jay Well-Known Member

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    Location:
    Brisbane
    My partner and I are buying a second property at the moment and it's going in her name (FHB concessions).

    My current property will become an IP and the new one will be our PPOR for the short term. When getting the loan, I am using the equity in my current property as a deposit on the new one. The bank has structured the loan so that I have a second mortgage on my house to pay 20% of the new place.

    The bank wants it setup like this:
    Property 1 - Owned By Me - $400k loan (just my name), $700k value
    Property 2 - Owned by partner - $400k loan (both names), $500k value
    Loan for $100k deposit to be added to Property 1 in MY name.

    My problem is that I assume that the $100k loan will NEVER be tax deductable for me as Property 2 will be in my partners name. We intend on refinancing the house 100% to her name before we move out but if she pays out my $100k loan then can she claim that interest?

    If I add her name to the $100k second mortgage then does that act as proof of anything or can she refinance that into property 2 later?

    What do we need to do to make it that in the future all of the interest on both properties is claimable. Please remember that the properties are each in only 1 name!

    Thanks!
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    Deductibility is based on names on house title, not on names of loan.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    If you properly lend her $100k she can later refinance the loan with you to a bank and then claim the interest if that property that the $100k was used for becomes a rental.


    You should have a commercial loan agreement in place.
     
  4. Hodor

    Hodor Well-Known Member

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    Not the specific topic. However isn't there a problem with the below.

    "If you have a spouse, they must be included on the application—either as an applicant or non-applicant spouse."

    "You or your spouse has not previously owned property in Australia"

    "Neither you or your spouse can have claimed this grant previously"

    I only had a quick look and it may not apply to your circumstances, be careful as there are penalties.
     
    legallyblonde likes this.
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    FHB ? Its like the Main residence CGT Exemption. Between yourselves you get ONE crack at it.
     
    legallyblonde likes this.
  6. Bris Jay

    Bris Jay Well-Known Member

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    Brisbane
    The FHB is based on spouse. We are not married and have been living de-facto for less than 2 years. Under the guidelines, we wouldn't be considered "spouse".