Using Australian Home Equity to buy overseas property

[mkbonline]

I am an Australian resident and have a PPOR in Australia. I have build up some good equity with my PPOR and wish to leverage it for buying property overseas (India). E.g Overseas investment property is $100K. I plan to give $20K as deposit from my savings and for the remaining $80k, I plan to first withdraw money from PPOR equity and then remit it to overseas. Also, I plan to take interest only loan for PPOR equity

My Question

1. Will financial institution/banks allow to use their loan amount for Overseas investments without knowing details about the overseas investment?
2. Will ATO consider this loan and property for Negative gearining benfits?
3. Any other issues/risk involves in this kind of investment (apart of forex rate, remittance charges, Australian capital gain tax when i sell the overseas property)

Cheers
Manish

 

[Terry_w]

I am an Australian resident and have a PPOR in Australia. I have build up some good equity with my PPOR and wish to leverage it for buying property overseas (India). E.g Overseas investment property is $100K. I plan to give $20K as deposit from my savings and for the remaining $80k, I plan to first withdraw money from PPOR equity and then remit it to overseas. Also, I plan to take interest only loan for PPOR equity

My Question

1. Will financial institution/banks allow to use their loan amount for Overseas investments without knowing details about the overseas investment?
2. Will ATO consider this loan and property for Negative gearining benfits?
3. Any other issues/risk involves in this kind of investment (apart of forex rate, remittance charges, Australian capital gain tax when i sell the overseas property)

Cheers
Manish

1. Some will
2. Yes, depending on a few things
3. Yes heaps - death, bankruptcy and incapacity for example. Also risk of losing the property due to different laws. I imagine in India the rule of law is not as strong as it is here - someone could forge a transfer and sell your property, what recourse would you have?

 

[Aaron_C]

I can answer 1 - the answer is yes, it will be a simple cash out.

 

[mkbonline]

Can you elaborate a bit more? What do you mean by cashout?

I can answer 1 - the answer is yes, it will be a simple cash out.

 

[Terry_w]

Can you elaborate a bit more? What do you mean by cashout?

Borrow money for further investments - bank gives you cash, you invest.

 

[Colin Rice]

You can go to 80 or even 90% LVR on your PPOR or IPs with some banks and access the difference (cash out) between what you currently owe, subject to serviceability.

Purpose of funds need only be for "future investment purposes".

 

[robbiejuve]

someone could forge a transfer and sell your property, what recourse would you have?

Had a mate who had a large property portfolio in South America that he inherited from his father. Someone stole his identity and started selling the properties.

Legal wrangling is still going on, absolute nightmare.