Cashback Deal

[Rob G.]

The problem will be that if a lender looks at the contract, they'll immediately discount the value of the property by $35k and they'll lend on the actual value. This could create some interesting challenges at settlement.

And will the ATO treat the "reduced loan" as a mixed purpose loan when the time comes to make it an IP ?

The purpose at the time of borrowing could partly be to fund the property and partly to fund the repayment to yourself ???

Cheers,

Rob

 

[Nathan]

The upside would be CGT reduced at settlement, and you can get in no money down technically...

however negatives are that it fraud, if disclosed will be discounted as BT said, and loan may not stack up, and could come haunt you...

guess you have to make the call....

 

[Rob G.]

Ah ... here is some useful material on recoupments reducing cost base:

IT2536 ... refunds of commissions.

Case 1/2005 ATC 101 ... incentive payments to purchase securities.

Cheers,

Rob

 

[stumunro]

It isn't fraud if it's stated in the contract as the bank is aware of it. Banks will only lend to valuation if you ask for too much anyway.

I'm not sure about cost base for CGT purposes but the obvious thing is your stamp duty is increased, so calculate this in how much you ask for as a rebate.