Split Loans

From: Steve Tarr


There seems to be a bit going on with Split loans and the legal ability to claim the compounded interest. In "Building Wealth Story by Story" this is briefly touched on and makes it clear that without the ability to gain the compounded interest there really is no point in deferring the rental income into your home loan. Has anyone taken up this opportunity and experienced differently?

According to my calculations (without claiming the compounded interest portion), I can quickly reduce my home loan by taking rent from 1 of my properties which in turn will create greater equity in my home to borrow against. The net effect at the end of 1 year is a greater reduction in the combined amount of the 2 loans.

can anyone assist with any thoughts??


steve
 
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Reply: 1
From: Rolf Latham


Hi Steve

Much depends on the structure you use, and the raltive figures of PPOR and IP debt etc.

My opinion, and the structure used by most of my clients is that ALL postive cahsflow should go toward repaying your NON tax deductible debt.

By that I mean all rent, wages and salaries should be either placed into an offset acct, or into the loan itself if using LOC or redraw loan.

There are other (read more aggresse grrrrrrrrrr) strategies including the borrowing of interest and running costs and still servicing the interest on those two, so that your debt reduces more quickly without looking at the capitalisation issue. AS Dale has previously pointed out though be aware that you may get pulled up anyway under some other provision unless you have some good commercial reason for doing what you are doing ?

Hope that helps, theres lots and lots on this site about that.

Ta

Rolf

Rolf
 
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Reply: 1.1
From: Steve Tarr


Hi Rolf

Many thanks for your thoughts. can you direct me to where I may get more information on this topic.

Thanks

Steve
 
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Reply: 1.1.1
From: Richard Hunt


Steve,

On the whole, I been disappointed with the recent TV and print media coverage of split loans.

It seems its been either directed at promoting the vested interests of lenders who market these facilities or its just a simplistic journalistic regurgitation of the facts surrounding the recent court decision.

Conspicuous by its absence has been any true insight into the opportunities and alternatives available to property investors today resulting from the court decision and any analysis of the impact different decisions today will have on longer term investment strategies.

In response to many of my clients concerns in regard to the lack of information available, I am in the process of finalising a newsletter on the operation of split loans, tax issues surrounding them and what strategies are available to investors today and how to make the right decisions.

Drop me an email and I'll be happy to send you a copy.

Regards
Richard
 
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Reply: 1.1.1.1
From: Ethan Smith


Hi Richard,

Thanks again for giving me Vince Lagana's name. I've teed up an appointment not with him but with what seems like one of his underlings, Steve Wilkie (their secretary wouldn't put me through to Vince, only to Steve).

Just reading your post, I'm just curious as to what you do for a living. Are you a mortgage broker?

Cheers

Ethan
 
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Reply: 1.1.1.1.1
From: Mike .


Hi Ethan,

If you click on Richard's name to the left of his e-mail address a screen will appear which has a User Profile of Richard. Richard has given a description of his business and experience.

Mike
 
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Reply: 1.1.1.1.2
From: Richard Hunt


Ethan,

That’s right, these days my core business is mortgage broking.

My background though is as a Chartered Accountant and Tax Specialist, initially providing consulting services to a range of clients on behalf of PricewaterhouseCoopers and Deloitte Touche Tohmatsu and later as the Australasian Group Tax Manager for a couple of multi-national public companies.

MortgageWerx, my mortgage broking business, focuses on sourcing and structuring finance for home owners and property investors. Investors who obtain finance through us, get any tax advice thrown in at no charge.

Good luck with Vince & Steve.

Regards
Richard
 
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Reply: 1.1.1.1.2.1
From: Richard Hunt


Ethan,

I just spoke with Vince. He said he will give you a call tomorrow.

Regards
Richard
 
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