Refinancing investment loan from single to joint name

Hi,

I just like to double check if it affects my tax deductibility if I refinance my investment loan that is in my name only to joint name. The property title is under my name only.

I had seen other posts to suggest joint name loans are ok and deductibility is for property title only. But not sure if it is still ok if loan is originated from single name.

Thanks in advance.

 

Yes, all good - as you've mentioned, it's who's on the title that gets the deductions.

 

Deductibility usually traces back to the owner of the property. I've seen a lot of properties owned in a single name for tax purposes, but in joint names to meet servicing criteria.

 

This is a grey area.

I think deductibility wouldnt change but there is no authority to base my opinion on.

It is generally a good idea to have a loan agreement between the owner and non owner which would strengthen your position.

Seek tax advice.

 

There can be a issue with debt assignment (ie Dad and Son and Dad forgives his son his share of a otherwise deductible debt) but provided this doesn't occur then the legal title will prevail. Bank related loan poses no concern. Especially spouses. Typically banks like more servicing than less.

 

Is this something I need to request the bank to provide, or is this something like a private agreement? Is there a sample I can see? Thanks

 

No, this is something between the parties with no involvement of the bank. something to talk to your lawyer about.

 

Hi,

I wonder if there is a mortgage duty to pay since the original loan and refinanced loan title is not the same?

Thanks

 

No duty in NSW if the borrower is a natural person and borrowing to buy property. and no duty on refinances for the same amount.

 

What if refinance for the same amount from a single name to a dual husband/wife names? I don't understand how they define "same borrower" under DUTIES ACT 1997 - SECT 220.

 

they would be different borrowers, but this would be exempt anyway because of s221c
DUTIES ACT 1997 - SECT 221C Mortgages associated with investment housing

And mortgage duty will be abolished from 1 July 2016
DUTIES ACT 1997 - SECT 203A Abolition of mortgage duty

 

kennyboi, after I hit send I got what you are saying. the taking of the spouse off the loan is not associated with the purchase of property so duty could apply.

Interesting, but I don't think it will because the mortgage will still be the same and the underlying use of the money is the same.

 

I am not sure what this line mean in Sect 220?:

(2) For the purposes of subsection (1), mortgages are created to secure an advance to the same borrower if, either directly by the mortgages themselves or indirectly through one or more collateral arrangements, the same person obtains the advances secured by them.

Where person is defined:
"person" includes persons who are associated persons.
Note : "Associated person" is defined in the Dictionary.

Then associated person is defined:
For the purposes of the Duties Act, an associated person means a person who is associated with another person in accordance with the following provisions:
persons are associated persons if they are related persons

There's also seem to be a 1 Mil limit with refinance before mortgage duty is payable?

 

spouses appear to come under the definition of 'person'