Titles and loans

[Mitch1]

Hi all,

A quick question on loans! Bought an IP in my name (hubby works I don't -cash positive prop.) so title is in my name.
Will be borrowing to renovate, what is the best option

Take out new construction loan in my name with hubby going gaurantor on loan

Take out loan in both names (does this show vested interest in property from a tax perspective?) I read somewhere that it does and the wife had to set up a separate account showing she was paying back 50% of the loan to the hubby at the bank loan interest rate???

Use funds from offset acc. On PPOR in joint Names ... Does this end up confusing deductibles on IP...I suspect it might!


And one last question. We set up a bog standard family trust in 1998 but due to family issues back in ireland, moved back there for a while and never used the trust. Both myself and hubby are trustees. I have found both the deed for the trust and the TFN for it, never been used before.
For future IP's is it wise to maybe start using it and how does it benefit, I don't know anything about trusts. Are we even able to use it?

Hhhmmm wondering if I should have posted those two separately....

 

[Rolf Latham]

Hi Mitch

If u are going to borrow, some things to look for are

1. Security doesnt matter if the loan is split from the main loan - use of the fnds matters
2. Dont use Offset funds that arent borrowed if you still have PPOR debt
3. Some tax practitioners dont like joint loans,where one party is a borrower of "serviceability / convenience" while the asset is in ONE name only. They prefer the loan to be in the name of the asset owner only with a guarantee from the other person, rather than them being a co borrower. Guarantees such as those can make for cans of worms, so one needs to really justify such structures.

ta
rof

 

[Mitch1]

Hi Rolf,

Thanks for getting back to me.
PPOR is debt free, well $100 with a $1 d/d per mth to keep offset facility open and available
IP bought for cash but borrowing to pay for Reno. I say Reno. More of a rebuild really! Just can't demolish..
I have no income, (no credit rating in my own name) which is why IP is in my name, lower tax rate etc

It seems to me like you reckon best way to go is loan in my name only which is my train of thought TBH, BUT can I get a loan with hubby as the 'back up' his salary will be the one servicing it until the IP is finished and rented out. Have always done joint loans, accounts etc. so first time testing this one!

 

[Terry_w]

Hi Rolf,

Thanks for getting back to me.
PPOR is debt free, well $100 with a $1 d/d per mth to keep offset facility open and available
IP bought for cash but borrowing to pay for Reno. I say Reno. More of a rebuild really! Just can't demolish..
I have no income, (no credit rating in my own name) which is why IP is in my name, lower tax rate etc

It seems to me like you reckon best way to go is loan in my name only which is my train of thought TBH, BUT can I get a loan with hubby as the 'back up' his salary will be the one servicing it until the IP is finished and rented out. Have always done joint loans, accounts etc. so first time testing this one!

There may be a few ways to do this.

Your husband could guarantee the loan - not ideal from a asset protection and a future servicing perspective. This could be a temporary measure and you could remove him as soon as you could service.

You could possibly use a private loan borrowing from your husband, depending on you situation. This may be able to be refinanced later with a lender and you could maintain deductibility.

Could also doa 90/10% ownership - but I cannot see the point in this really/