Splitting ownership advice

[jazzeddie1234]

Hi, I am buying my first investment property and had all sorts of different advice on how to split the ownership. Some say 50/50 with my wife but this impacts my tax (I am the highest tax payer by miles), some say 99/1 but this seems to restrict the number of lenders willing to finance, some say 100 (to me) with power of attorney for my wife (but then she wants to feel part of the deal)

So, any comments or suggestions? Sorry if this has been asked before

Ed

 

[MissMuffitt]

When we purchased our first IP we made it 99/1 as he is the highest income earner.

Our lender never asked us how we were going to do the split, I just made sure that our conveyancer knew how to split it so that it went through to the right authorities correctly.

 

[regrow]

Hi jazzeddie1234

We just have the house in my name only as I'm not only the highest income earner I'm the only income earner.

As MissMuffitt says banks are not interested with what the split is as they only want to know if you can make the repayments with your combined wages.

Regards

Regrow

 

[jazzeddie1234]

I rang my current bank (one of the 4 starting with c) and they were not interested unless it was 50/50 or 100. Maybe I hit an odd one?

At the moment I am still wide eyed at the interest bill - even though I have modelled the rent and capital gain to death to make sure it is viable. I guess this is why most people don't get started

And I will get RSI from signing all the paper work!

 

[Apocalypse]

Have a look here: http://www.bantacs.com.au/fbt_rental.php

 

[jazzeddie1234]

I checked with my HR section and they offer the salary sacrifice option! I pay all the expenses as a salary deduction no matter what the % of ownership is - meaning the IP can be 50/50 or 1/99 and I still get the tax benefit of all the costs. Only down side can see is if I move to another organisation - I guess it is a way of encouraging me to stay here...

Of course I have no intention of selling as I like the buy and hold idea

 

[tubs]

I can't see any advantage of anything BUT 100% in your name. No need for your wife to be on the title at all. Why were you advised 50/50?

 

[jazzeddie1234]

That was just one of the options - I think because some lenders don't like an odd split like 99/1 (which is what I decided on). And the salary sac option means you can split any way you like but all the costs go to the income you choose but the capital gain is allocated according to the split. As mentioned above, this means you can sac the costs to the highest income and distribute the gains to the lowest (assuming a 1/99% split to wife on low income). I went for the 99/1 only because I don't want to be tied to an employer.

I'm new at this so don't take this as gospel!

 

[tubs]

I'd check this through with an accountant first.Sure, the salary sacrifice can let you take the effect of negative gearing all on yourself, but I'm not sure if it works in reverse. And I had a feeling (I know some about the structure you're talking about) that it was only for 50/50 splits. I believe it can work, but just tread carefully around the details.

Otherwise, I still dont see the need for a 50/50 and not in your name entirely. Its easier and you're not tied to one employer (and what happens if they change the rules, or the ATO changes them?)

 

[Modal Harmony]

We decided to split 90/10 for our IP's; I still get most of the deductions and it's definitely a joint effort between me and my wife!