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Refinancing investment loan from single to joint name

Discussion in 'Accounting & Tax' started by kennyboi, 4th Mar, 2016.

  1. kennyboi

    kennyboi Well-Known Member

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    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.
     
  2. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

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

    Peter_Tersteeg Finance broker and strategist Business Member

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    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.
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    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.
     
  6. kennyboi

    kennyboi Well-Known Member

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    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
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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

    kennyboi Well-Known Member

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    Hi,

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

    Thanks
     
  9. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
  10. kennyboi

    kennyboi Well-Known Member

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    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.
     
  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  12. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    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.
     
  13. kennyboi

    kennyboi Well-Known Member

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    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?
     
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    spouses appear to come under the definition of 'person'