Pty LTD Loan for property and or investing/trading in shares and derivatives

Discussion in 'Business Accounting, Tax & Legal' started by JoeK, 19th Dec, 2020.

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  1. JoeK

    JoeK Active Member

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    Hi Folks


    I hope you are well. We've setup a family investment company for trading shares and derivatives. Going forward we'll have long-term investments like a core portfolio with some dividend income companies. We are in the process of accumulating profits and building cash position. We'd like to get a loan with a redraw facility. Can you please help us with some general guidance so we can read more?
    1. when can we apply for loan to buy a property rather than using the company cash and profit? we are ok to put 10% or 20% of the money as a deposit. We understand that the company pays more nominal tax but we are keen to have grow the cash rather then spend/invest to reduce tax.
    a. we may be able to rent the property and live there as a company income (guarantee)
    b. how long the company needs to wait until it is eligible for a loan? is it 2 years?
    c. an option we are thinking of and unsure if if viable. the company buys the property with cash and then seeks a business loan to invest and trade with the property being the collateral?
    d. unsure if there are any other options?
    2. how much can we apply for
    a. LVR? how much deposit we would need to put in
    3. what are some of the important stuff that we'd need to be mindful or learn about

    Sure, we are going to get formal help.


    Thanks
     
  2. The Y-man

    The Y-man Moderator Staff Member

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    Hope you got formal tax advice, as well as asset protection advice when you did this - all sorts of red flags going up in my head....


    The Y-man
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I can't understand the question, but I have written over 700 tips on here covering a lot of the legal and tax issues and lending issues associated with structuring
     
  4. Trainee

    Trainee Well-Known Member

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    Your post is confusing. You mention trading shares and derivatives, but then all your questions are about buying property using the company.

    Any number of questions like who owns the company, asset protection, possible income streaming, separating trading from more passive property investment, companies do not get capital gains discounts, etc. Putting high risk assets like derivatives with passive shares might not be a good idea anyway.

    Can't even understand what you are trying to do.
     
    Last edited: 19th Dec, 2020
  5. JoeK

    JoeK Active Member

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    Sorry, we'd like to get a loan with a redraw facility i.e. we'd like our company to get a bank loan to buy a property rather than paying in cash. We are owners of the company.
    The trading shares / derivatives - it is just for context / background.

    Can you please assist with some links and reading?

    The question is a company loan / mortgage question only. No asset protection, separation, etc
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    yes that is possible and straight forward.
     
  7. JoeK

    JoeK Active Member

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    Thanks Terryw. Do you have something handy that we can read? One ore more articles as in\
    1. what is possible?
    2. the banks requirements
    3. types of loans

    Something to get us started.
     
  8. meffn

    meffn Well-Known Member

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    Basically you need to meet serviceability requirements. The difficulty you might have is that for a consumer loan, investment income unlike PAYG income is heavily discounted maybe only 70% is considered and requires a longer history (say 2 years) and there is typically a limit to the amount of investment income you are relying on is not more than a % of your total income. So you might have to provide a guarantee the loan with your PAYG income. You should speak to a broker to understand if there is a lender that meets your niche requirements.
     
  9. JoeK

    JoeK Active Member

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    Thanks Meffn
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    I am not sure if I have written on this, but will put up a post.

    With companies all directors will need to give personal guarantees and usually if the guarantor could qualify on their own for a loan then the company will qualify for a loan.
    Products are generally the same, requirements pretty much the same as for individual borrowers.

    But you should legal advice on whether a company should be the owner of the assets and if so whether it should be the borrower and then seek credit advice on lending options.
     
  11. JoeK

    JoeK Active Member

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    Thanks Terry_w. Do you offer this kind of help or do you know mortgage brokers that can help?
     
  12. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes I am a mortgage broker and a lawyer that specialises in structuring.