Investment loan vs PPOR loan

Hi,

My wife and I are looking at purchasing a property, initially as an investment and further down the track as a principal place of residence. Does the bank have different lending criteria for investment loans and PPOR loans? Or does it purely depend on the figure that you are asking for and your serviceability? Is there a minimum period that the property must be an investment for?

For a property purchased in the above scenario, what are the tax implications when it is sold? I believe capital gains tax is assessed on the period that the property was an investment? Is this correct?

Any help would be appreciated.

Cheers.
 
Does the bank have different lending criteria for investment loans and PPOR loans?

Different criteria yes (in terms of how they assess the loan) but the end loan product is the same.

Is there a minimum period that the property must be an investment for?

After you settle you can do whatever you want in terms of living in / renting out the property. Bank doesn't care one iota as long as you pay the interest.
 
Hi,

My wife and I are looking at purchasing a property, initially as an investment and further down the track as a principal place of residence. Does the bank have different lending criteria for investment loans and PPOR loans? Or does it purely depend on the figure that you are asking for and your serviceability? Is there a minimum period that the property must be an investment for?

The bank assess your affordability differently - however it's the same product.
But loan structure is important from a change perspective form an IP to PPOR or vice versa.

For a property purchased in the above scenario, what are the tax implications when it is sold? I believe capital gains tax is assessed on the period that the property was an investment? Is this correct?

Any help would be appreciated.

Cheers.

Not an tax accountant, but yes from my understanding pro-rated CGT payable from the time it was an IP.
 
I'm in exactly the same situation, about to buy, will be investment for 12 months then PPOR.
What are the CGT/yearly tax implications for getting the loan in 1 name (the person earning the most) as opposed to in 2 names? Would like to get it right from the start.
 
What are the CGT/yearly tax implications for getting the loan in 1 name (the person earning the most) as opposed to in 2 names? Would like to get it right from the start.

Well there's a two edged sword. Buying in the high income person's name (assuming they stay high income) means better negative gearing benefits because the marginal tax rate is higher. If you buy in the low income person's name (assuming they stay low) then you will get a lower CGT bill when/if you sell, but forego the ongoing negative gearing benefits.
 
Well there's a two edged sword. Buying in the high income person's name (assuming they stay high income) means better negative gearing benefits because the marginal tax rate is higher. If you buy in the low income person's name (assuming they stay low) then you will get a lower CGT bill when/if you sell, but forego the ongoing negative gearing benefits.

If in both names? Is tax split 50/50 at end of financial year?
 
I'm in exactly the same situation, about to buy, will be investment for 12 months then PPOR.
What are the CGT/yearly tax implications for getting the loan in 1 name (the person earning the most) as opposed to in 2 names? Would like to get it right from the start.

clarification here is that the loan names wont have muxh influence on deductability but the names on title.

You can have 2 borrowers, but just one name, but you cant have 2 names on title and only one borrower ( without a guarantee from the other owner)

ta
rolf
 
clarification here is that the loan names wont have muxh influence on deductability but the names on title.
You can have 2 borrowers, but just one name, but you cant have 2 names on title and only one borrower ( without a guarantee from the other owner)
ta
rolf

Ah Ok. So is it better to have 2 names on the title so you can split the tax/CGT etc..? Or better to only be in 1 name.
 
Ah Ok. So is it better to have 2 names on the title so you can split the tax/CGT etc..? Or better to only be in 1 name.

Azazel that is impossible to answer because no one knows the answer. You can only work it out in hindsight. If you knew that you were going to buy a property for $500k, and sell it in 5 years time for $1m, and you knew that in 5 years that none of you would be working so you get the lowest CGT possible, then you may know what structure to use. If, however, like all things in life, these are 100% unknown, you just have to make the best guess.
 
Ah Ok. So is it better to have 2 names on the title so you can split the tax/CGT etc..? Or better to only be in 1 name.

2 names on the title: you split income, but also expenses. You get to split CG in the future, but have to split negative gearing now (which would be more valuable to the higher income earner).

There is no better or worse, just different outcomes depending on your circumstances.
 
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