Getting loan through family in exchange for cap gains?

[Welcome]

GDay,

I am thinking of putting proposal to my old man, basic outline is:

• He gets a loan in his name
• I purchase an IP in my name
• I pay ALL the costs and interest
• The tax savings that he gets from deductions go back to me for interest
• At the end of a period (eg 7 years) he is entitled to 25% of the equity that has built up as a lump sum payment, tax free.

Pro's for me: Only loans I will be able to get next are no-doc but want to go higher LVR's and this way I can. Get exposure I wouldn't be able to get without him. We will also benefit from more tax benefits with loan in his name.

Con's for me: Lose a chunk of my capital gains however it is gains I wouldn't have been able to get otherwise.

Pro's for him: he has no money involved, no interest to pay, and is entitled to a proportion of the cap gains after a set time.

Cons for him: are that he would be legally liable if the loan defaults. However I think I could convince him as he has a chunk of my assets in a trust with him as trustee and appointer!

Anyone done anything similar or got any thoughts? May also throw some things in such as an option for him to extend, a portion of income if becomes +vely geared.... depends on how he takes the idea without those

Cheers for any feedback/ideas

 

[Rolf Latham]

Hiya

Not many funders will do what you want...............

Also the dedns will flow to the person with the security, generally only if the loan is also in their name

ta
rolf

 

[Dazz]

• He gets a loan in his name
• I purchase an IP in my name
• The tax savings that he gets from deductions go back to me for interest

If the property title is in your name, your father is not entitled to any deductions whatsoever.

To the best of my knowledge, the name/s on the title dictate distribution of both profits and losses. Name on the loan doesn't mean squat in the eyes of the ATO.

 

[jrc]

GDay,

I am thinking of putting proposal to my old man, basic outline is:

• I pay ALL the costs and interest
• The tax savings that he gets from deductions go back to me for interest
• We will also benefit from more tax benefits with loan in his name.
  
  
  Pro's for him: he has no money involved, no interest to pay,
  

• 
  
  You pay all the interest and costs - what tax deductions are there for your father?

 

[Welcome]

MMmmmm.... back to the drawing board.

Thanks

 

[Pushka]

The loan for the property and the title of the property mortgaged have to be in the same names.

 

[Twitch]

The loan for the property and the title of the property mortgaged have to be in the same names.

or at least whoever is on the title must be on the loan, however banks don't mind in the least if there are extra people on the loan.

 

[GoAnna!]

Why can't he actually be on the title with % share as tenants in common?