LOC Question

[Rino]

I know this has probably been asked before, just can't find any threads relating to it.

My PPoR is in my name and my wife's name 50/50. We plan on using the equity in the form of a LOC to buy property/shares in my name only.

Can the LOC/loan be in both names, used to invest in assets in my name only, and the interest be deductable to me only, even though my wife's name is on the loan?

 

[LynnH]

Yes! It is the purpose of the loan which determines its deductibility. An explanation of this is in my recent post ...

http://www.somersoft.com/forums/showthread.php?p=369091#post.369091

The rest of the thread is well worth a read!

Cheers
LynnH

 

[Joe D]

Can the LOC/loan be in both names, used to invest in assets in my name only, and the interest be deductable to me only, even though my wife's name is on the loan?

Rino

Why would you want your wife's name on the LOC loan if you are doing all the investments in your name?

The PPOR is just the security for the loan so why not have the LOC in your name only and remove all doubt.

The bank will obviously want both owners (your wife and you) to act as guarantors against the borrower (you).

Four of my LOCs use a property not in my name as the main security.

Joe D

 

[Rino]

Joe D,

I don't want my wife's name on the LOC. But I remember helping my parents set one up a couple years ago with St George who insisted both names had to be on the loan as both names were on their PPOR being put up as security. We weren't sure at the time whether the loan interest would be fully deductable to my father only, as he was the only one still working.

But I understand some lenders will do it the way you describe.

LynnH - thanks!

 

[Peter_Tersteeg]

Since the property is in both your names, the lender will probably want any future funding against that property also to be in both names.

As far as tax deductablility is concerned, as already mentioned, it is the purpose of the funds that determines who gets the deductions. If you use the LOC to buy shares or property only in your name, the interest for those funds will apply only to yourself.

 

[RetireEarly]

Speak to ANZ they allowed me to do this, when NAB said no... it must be in joint names... cost them a significant amount of my business and all because the stupid banker didn't understand the benefits of negative gearing.

Lesson.. know your stuff better than the bank!