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private loan to partner for deposit or other option?

Discussion in 'Property Finance' started by B-Man, 29th Jun, 2016.

  1. B-Man

    B-Man Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    55
    Location:
    SA
    Im selling my old PPOR to my partner as i had too much money tied up to rent it as it was and i would like to free up some of that money.
    i tried to sell it but the market is a little slow.

    im having trouble with what to do for the deposit.

    the new PPOR is my name, my loan etc.

    if i keep it and rent it out i will get stuff all tax deductions, lose the CGT free if i sell in future and not be able to get the money out (now) without having to pay interest on it.

    so selling to the partner is what appears to work on paper.
    the house will be close to neutral geared

    the plan was to go guarantor and using the new PPOR as security by pumping some cash into the PPOR loan so there was equity available but that didnt pass the bank guarantee rules (not sure how as been living together for ~5 years only thing is not being married)

    we could use cash but that would tie 30-40k back up in the loan again rather than pumping it into the PPOR loan to reduce interest and then borrowing it back for the IP.
    It still ends up better than not doing anything as it would still free up some cash not but not the scenario i was hoping for.

    is it hard to setup a private lend from me to her? keeping it above board for tax purposes?

    would putting her name on the title of the new PPOR allow her to then borrow from equity created in it by paying the loan down?

    does anyone else have any other solutions?
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes you could lend her the deposit.

    But seek specific legal and tax advice as there are many issues to consider.
     
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  3. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

    Joined:
    4th Mar, 2016
    Posts:
    230
    Location:
    Melbourne
    Interesting, I personally have never done a guarantee between a de facto couple before, but considering a de facto can be a party on a loan against a property that they have no interest I find that very strange...
    Which banks did you try? I just did a quick search and there are a bunch who specifically state that de facto guarantees are within policy.
     
    Last edited: 29th Jun, 2016
  4. B-Man

    B-Man Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    55
    Location:
    SA
    it was bank sa

    @terry what would it cost to do it and what issues would i come across?
     
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,033
    Location:
    Sydney
    A loan agreement? About $1000

    Issues to consider (just some)
    - interest rate
    - term
    - security (none, registered mortgage/unregistered)
    - IO/PI
    - deductibility of interest for lender if they are borrowing
    - Part VIA anti avoidance provisions
    - estate planning aspects - what happens if one party dies?
    - asset protection issues
     
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