Tightening credit market and HDTs or PITs

[Pat]

As a follow up Pat, how would the ATO view a HTD with several properties in it with different lenders.

Lender A has the individual as the borrower.
Lender B has the trustee / trust as the borrower.

I certainly don't expect there would be a problem with the property held by Lender A, but what could happen with Lender B's property in this case?

I have seen cases where a clash of lenders and circumstances have led to this situation.

Hi Pete,

Assuming there are two properties here A & B then Property B will have a loss carried forward in the trust because I assume that the expenses, including interest assessed to the trust, will outweigh the rental income.

Hope this answers the question.

 

[JIT]

Hiya JIT

Not an exhaustive list, and not covering exceptions

Thanks Rolf, quite a few then!

Interestingly though, I have done full-doc HDT with CBA no problems, but by going direct to the bank and having a switched-on banker working with me, as opposed to the broker channel...

Not sure what'll happen when my friendly banker leaves CBA though?!

I'm thinking of ''diversifying between lenders'' with my HDT loans just in case the bank I'm with changes their mind.

 

[ianvestor]

Ian hate to say if you come to refinance or purchase again think you will be looking at a rate > than 10.5% for a PIT Nodoc.

Might want to think about whether you can go lodoc next time.

What's the difference? I mean, what docs would I need to submit for lodoc?

 

[Rolf Latham]

Hi JIT

Colonial will on occasion do HDTs as well...................but as a broker we refuse to work with monday thursday and blue moon lenders............

Exceptions in policy leave u up the creek without a paddle if you have much exposure with that exception, so diversification in ur case would be beneficial.

Exceptions to policy leave one in a "persona non grata" position in diplomatic terms.................this is not the place u want to be if you have built up equity, and expect that equity to be available to make the next purchase or do the LOE thing, im sure youd agree.

So you can see our penchant for "sure" things.

ta
ro

 

[JIT]

so diversification in ur case would be beneficial.

Yes, I agree.

So you can see our penchant for "sure" things.

Yes, a bit like Bankwest was a ''sure'' thing a few years ago, oh well!

 

[WASP]

Rolf is correct at 70% LVR but at 80% you are looking at a little higher rate.

JIT many lenders wont touch them full doc / lodoc or anydoc but there are still a number of lenders who have no problems.

Hi Qlds007

Are you referencing 80% lodoc for the HDT with Trustee not on the loan

In this scenario it is a pure refinance and there is a Capital Gain assessed to the unitholder based on the Market Value of the property or properties at this time.

The Capital Gain cannot be streamed if there were units on issue, the Capital Gain must go to the Unitholders.

Hi Pat

With a 50% CGT discount on assets held over 12 months and only 1/3 of that as well for someone paying no or low tax would it be plausible?

Who gets the capital gain if its then realised and how?

If the credit markets relax, what happens if you could later refinance again to the approved structure

The PIT sounds like they may have solved the problem with the onloan agreement if in lodoc/nodoc whereas the HDT has not

Hiya JIT

Not an exhaustive list, and not covering exceptions


CBA - no usually, they dont like the unit component

NAB yes

ANZ yes

Westpac ( only through biz banking , so no > than 80 %, no LOCs or offsets)

STG yes

AMP yes

Suncorp Yes

Adelaide Bank ( only through some mortgage managers)

Bankwest used to, but now they are not so sure

Citibank yes ( though we have yet to try them)\

Heritage yes

ING yes


ta
rolf

great list Rolf Latham

 

[Pat]

Hi WASP,

As mentioned the Cap Gain gets assessed to the Unitholder. If there is another refinance back to the unitholder who is then reissued units then a Cap gain is assessed to the Trust. The calc must be done to see if this saves you money based on the lower interest rate of refinancing versus the tax savings of negative gearing .

The PIT takes more risks with on-loan agreements with the ATO. Not a good idea to be taking on the ATO with a Hybrid Trust/Related Party on-loan agreement I would have thought.