Refinancing and deductibility question

[eggnog]

If a loan is under 2 names (husband and wife) how is deductibility for tax purposes treated? Is it apportioned 50:50?

Next lets say they refinance. Can they refinance to a new bank and have the loan only under one name (say the wifes name only)? or do they need to keep it as a joint loan?

Would the wife be able to claim full deductibility of the whole loan if refinanced solely on her name?

Is this the best way of refinancing a joint loan?

 

[Brady]

What is the ownership on the title?

This will determine the deductability.

And ownership when you refinance will also determine the deductability.

 

[Terry_w]

Its generally the title that determines deductibility. Refinancing a loan doesn't change deductibility either.

If you have joint loans but only 1 on title it is best to remove the non title party from the loan if possible. This will reduce risk and improve serviceability, without changing any tax deductions.

 

[eggnog]

Thanks for the prompt replies. I was under the impression that the person on the loan documents is the one who can claim the deductions.

Since the title is only under 1 name I'll try and remove the other from the loan when refinancing.

 

[jonmardell]

If a loan is under 2 names (husband and wife) how is deductibility for tax purposes treated? Is it apportioned 50:50?

Next lets say they refinance. Can they refinance to a new bank and have the loan only under one name (say the wifes name only)? or do they need to keep it as a joint loan?

Would the wife be able to claim full deductibility of the whole loan if refinanced solely on her name?

Is this the best way of refinancing a joint loan?

this is something you would want to get specific advice from your accountant prior to doing anything but i have seen cases specifically for properties owned by a trust and the loan is setup in the individual name only and then a loan agreement between the trust and the individual this way the individual can claim the interest (useful for negative geared properties)

 

[Rolf Latham]

.

If you have joint loans but only 1 on title it is best to remove the non title party from the loan if possible. This will reduce risk and improve serviceability, without changing any tax deductions.

not if the non title party has the servicing income .........................

And servicing guarantees amongst spouses have their own issues with many lenders wanting peops to get independent legal and financial advice which solis and Fps are increasingly being advised NOT to provide by their associations.


ta
rolf

 

[Terry_w]

this is something you would want to get specific advice from your accountant prior to doing anything but i have seen cases specifically for properties owned by a trust and the loan is setup in the individual name only and then a loan agreement between the trust and the individual this way the individual can claim the interest (useful for negative geared properties)

Jon, this is only possible where a unit holder borrows to acquire income producing units. The unit holder must be absolutely entitled to both income and capital for the interest to be deductible too.

If a discretionary trustee borrows and the loan is in a beneficiary's name the interest would not be deductible.