Question about loans for ABN holders

Discussion in 'Loans & Mortgage Brokers' started by Peter KP, 19th Oct, 2019.

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  1. Peter KP

    Peter KP Member

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    8th Oct, 2019
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    Hi,

    A quick question for mortgage brokers, I'm an ABN holder and trying to get the documentation together so I can successfully submit a loan application for a shop.

    My question is I lease a shop and pay a fair amount each month in rent (lets call it $R), but when I submit my tax return the income used to pay the rent becomes a valid tax deduction and disappears from my income (rightly so), so my serviceability drops by $R (taxable income = gross income - expenses). Is there a way to get the bank to understand that my income for repaying any loan is taxable income + $R, because I wont be paying rent if I have my own shop? To put another way, the money I pay in rent reduces my taxable income, but will be used to pay the mortgage.

    This might not be clear, so let me know if I need to explain things a bit better.

    Thanks for any help you can provide.
     
    Peter KP, 19th Oct, 2019
    #1
  2. Terry_w

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

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    No

    Banks go on profit and not turn over.
     
    Terry_w, 19th Oct, 2019
    #2
  3. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    The rent you previo paid will be added back to increase your taxable income
    .

    It's called an ad back

    Ta
    Rolf
     
    Rolf Latham, 19th Oct, 2019
    #3
    Terry_w likes this.
  4. Peter KP

    Peter KP Member

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    Rolf, is that done by the bank when assessing serviceability?
     
    Peter KP, 19th Oct, 2019
    #4
  5. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Yes Peter, the lender would be doing that.

    Its part of a normal Self employed assessment

    ta
    rolf
     
    Rolf Latham, 20th Oct, 2019
    #5