advice on loan setup.

[kotim]

Folks am buying an investment property, I earn much more money than my wife so in terms of tax deductions better as I understand it to have it in my name only for tax purposes. However for the purpose of the loan size I need my wife's income to be included as income for the purpose of the loan

What I am asking is, Can I set it up so that its in both our names, loan wise, but my name only is on the title, if that's right.

What we want to be able to do in application is for both our incomes to be used to support the size of loan but we would prefer that my name be the only name for the purpose of taxation.

I hope I sound clear enough.

thanks

 

[Peter_Tersteeg]

Between husband and wife, having one person own the property and the other also be on the loan to show affordability isn't a problem. You should be fine from the lending perspective.

The tax deductability is a bit of a grey area. Deductability is determined by the purpose of the property and the name on the title has a lot of weight in the purpose argument. Having a spouse on the loan however, does imply a benefit to the spouse which muddies the purpose test. Your accountant needs to give you advice on this.

 

[Terry_w]

Thinking longer term, what will happen in a few years when the property becomes cashflow positive?

 

[Aaron_C]

Having a spouse as a co-borrower even though he/she is not on title is not an issue.

 

[Shahin_Afarin]

Another question is will your wife be earning much more money than she is now in the not so distant future?

Regards

Shahin

 

[kotim]

Thanks folks, We have had our children and no more should come. So my wife depending upon how much she wants to work will probably be less than me. Actually we are looking at the house as both investment and owner occupied(future). Fantastic place and want to live their. However it is possible that I may never be able to move down their. Due to the good rental return it will be cash flow positive. So if all works well in about a year I will be down their, if not who knows. I was just after basics in terms of tax etc as I have not paid much attention to the tax law in the last decade etc.

I just wanted to be a little informed before I went and saw accountant etc as it is not unusual for advisers to be wrong about setting up structures and deciding which way to go.

 

[Terry_w]

I just wanted to be a little informed before I went and saw accountant etc as it is not unusual for advisers to be wrong about setting up structures and deciding which way to go.

It seems they are wrong more than they are right.

Consider the asset protection issues of joint loans. Best to avoid putting your wife on the loan if possible. Rather than many properties on joint names I favour getting different properties in each name individually. Safer if you get into financial trouble.

 

[Rolf Latham]

Fantastic place and want to live their. However it is possible that I may never be able to move down their. Due to the good rental return it will be cash flow positive. .

Im not a tax guy, but i would have thought a Family trust with a Corp trustee would be a good fit for this, since we dont need to worry about neg gearing

ta

rolf