Hi all,
LOL didn't know whether to post this in finance, legal or tax section - so posted it in 'Other' instead.
My spouse's father (FIL), in his 70s, has been toying around with an idea for a while and is keen to put some serious thought into implementing it. Would appreciate your opinions on it. Very early stages of planning and we will obviously seek advice from our accountant, broker, solicitor etc, but wouldn't mind sounding it out on SS first (doesn't everyone?). FIL is also seeking advice from his finance people and solicitor.
In short, FIL is keen to buy investment property with the view that my spouse will inherit it when he passes away. He is planning to:
- access equity in one of his fully paid off properties for LOC (say ~$200K) with Bank A, use these funds for 20% deposit and costs
- purchase investment property on 80% LVR and loan with Bank B (ie. ~$400K)
- both loans' interest and costs to be paid off from Bank A LOC, and rent paid into this also (so capitalising interest)
- property neutral or paper negative geared (depreciation)
- purchased as Joint Proprieters b/w FIL and spouse, so spouse will automatically get full ownership later on
- spouse to claim 50% of any negatively geared proportion
- FIL to take out both loans in his name only
So in short, no one will really need to be putting out cashflow as LOC will absorb costs. With my spouse getting tax benefits if applicable.
My Qs:
1) FIL wants to take out loans in his name so that my spouse's serviceability will not be affected. He is a self-funded retiree with substantial super and assuming some of the rent will be taken into account, do you think there will be any difficulties taking out these loans?
2) Any implications with having 1 name on the mortgages, but 2 on the title?
3) Assuming as Joint Proprieters, my spouse will automatically own the full title when FIL passes away, what happens to the mortgage in FIL's name? ie. goes to his estate? bank will want to sell as mortgagee sale? specify in will that mortgage to be passed onto my spouse?
4) Any suggestions as to other ways to approach this?
FIL is being very generous (bless him) and we want to make sure this is planned properly from the outset. Once again, I stress we will get proper advice, but want to throw ideas out here first. Cheers.
LOL didn't know whether to post this in finance, legal or tax section - so posted it in 'Other' instead.
My spouse's father (FIL), in his 70s, has been toying around with an idea for a while and is keen to put some serious thought into implementing it. Would appreciate your opinions on it. Very early stages of planning and we will obviously seek advice from our accountant, broker, solicitor etc, but wouldn't mind sounding it out on SS first (doesn't everyone?).
FIL is also seeking advice from his finance people and solicitor.In short, FIL is keen to buy investment property with the view that my spouse will inherit it when he passes away. He is planning to:
- access equity in one of his fully paid off properties for LOC (say ~$200K) with Bank A, use these funds for 20% deposit and costs
- purchase investment property on 80% LVR and loan with Bank B (ie. ~$400K)
- both loans' interest and costs to be paid off from Bank A LOC, and rent paid into this also (so capitalising interest)
- property neutral or paper negative geared (depreciation)
- purchased as Joint Proprieters b/w FIL and spouse, so spouse will automatically get full ownership later on
- spouse to claim 50% of any negatively geared proportion
- FIL to take out both loans in his name only
So in short, no one will really need to be putting out cashflow as LOC will absorb costs. With my spouse getting tax benefits if applicable.
My Qs:
1) FIL wants to take out loans in his name so that my spouse's serviceability will not be affected. He is a self-funded retiree with substantial super and assuming some of the rent will be taken into account, do you think there will be any difficulties taking out these loans?
2) Any implications with having 1 name on the mortgages, but 2 on the title?
3) Assuming as Joint Proprieters, my spouse will automatically own the full title when FIL passes away, what happens to the mortgage in FIL's name? ie. goes to his estate? bank will want to sell as mortgagee sale? specify in will that mortgage to be passed onto my spouse?
4) Any suggestions as to other ways to approach this?
FIL is being very generous (bless him) and we want to make sure this is planned properly from the outset. Once again, I stress we will get proper advice, but want to throw ideas out here first. Cheers.
