Join Australia's most dynamic and respected property investment community

Spouse on title other spouse on mortgage.

Discussion in 'Property Finance' started by Lamby, 16th Apr, 2016.

  1. Lamby

    Lamby Member

    Joined:
    16th Apr, 2016
    Posts:
    17
    Location:
    South East SA
    In the process of buying a block of land for investment purposes with the in-laws and want to structure it so that the respective wives are on the title (cgt reasons, both stay at home mums). However the loan will need to be done using my and my father in law's income for servicing.

    Have started the ball rolling via CBA, loans won't be crossed, etc and in that discussion it went from having all four on the loan to just the husbands. At the time I thought "fair enough" but since thinking about it I've begun to wonder if that's actually possible?

    Before I chase it up Monday I thought I'd ask here, have done a search of propertychat and somersoft but couldn't find anything that matched these circumstances.
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,104
    Location:
    Melbourne, Nationwide
    Whoever is on the title needs to be on the loan, but spouces can be on the loan for servicing purposes without being on the title.
     
  3. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,021
    Location:
    Sydney
    The husbands can guarantee with the loan in the names of the wives.
     
  4. Jess Peletier

    Jess Peletier Mortgage Broker - Australia Wide Business Member

    Joined:
    18th Jun, 2015
    Posts:
    2,781
    Location:
    Perth WA
    If the wives are on the title, they'll also have to be on the loan but the husbands also can be for servicing purposes.
     
  5. Lamby

    Lamby Member

    Joined:
    16th Apr, 2016
    Posts:
    17
    Location:
    South East SA
    Thanks guys, I thought it sounded a little to simple.

    Been thinking further today and thought I'd ask some further questions to see if my logic is sound (starting to think I'm too focused on one thing - CGT). Given the land has been purchased as an investment, both with capital value increases (we don't think we'd be able to afford to buy in a similar area in a few years time) and potential income post build in mind, would we be better leaving it in the husband's names?

    The block is 30metre waterfront of around 1000sqmetres and the intention is that when we're in a financial position to build to do so and use as a holiday rental with the occasional (paid) use by family members. Given that the interest is tax deductible (I think, having been trawling through your contributions on Steele TerryW) would we be better leaving it in the earning spouses names for the long term benefit of interest deductibility and ignoring the implication of the CGT which may or may not occur in the distant future? Hope that makes sense.
     
  6. jpcashflow

    jpcashflow Well-Known Member Business Member

    Joined:
    21st Jun, 2015
    Posts:
    371
    Location:
    Melbourne
    With the block of land are you going to eventually build on it or anything?
     
  7. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,021
    Location:
    Sydney
    There are no simple answers to these questions, because there are multiple aspects you haven't considered.

    If the interest were deductible it may be better to buy in the higher income earners name - unit it becomes cashflow positive. Then It would result in more tax.

    What happens to the CGT when sold?

    What if husband sells it without your knowledge. Dies and leaves it to Molly Meldrum in his will?

    What if husband sued?

    Furthermore it sounds like you are holding with the intention to build a holiday house and this would mean the interest is not deductible.
     
  8. Lamby

    Lamby Member

    Joined:
    16th Apr, 2016
    Posts:
    17
    Location:
    South East SA
    Sorry, mustn't have been clear. The intention is to build a house that can be rented out for short stays (weekend to two weeks) and that if family used it they'd have to pay market rates to make sure we didn't have a mixed purpose issue.

    Sounds like a talk with the accountant might be in order before talking to the bank again.