Unit trust home loan

Thanks Terry

Terry_w said:

Yes.

The trust will then claim all the deductions for interest.

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I assume then in scenario 1 (OP's situation) the directors / borrowers will be able the claim deductions for the interest rather than the company.

So which option out of the two would be favoured by lenders? Or is it all the same to them

Cheers

antistar said:

Thanks Terry



I assume then in scenario 1 (OP's situation) the directors / borrowers will be able the claim deductions for the interest rather than the company.

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Nope. Unit holders may be able to claim the interest if they borrow to buy the units.

antistar said:

So which option out of the two would be favoured by lenders? Or is it all the same to them

Cheers

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Trustee owning and trustee borrowing would be easier to get finance.

Very clear.

Thank you again

While we're on the topic of unit trust IP loans.

Fixed unit trust with company trustee, of which i'm director. How does this process sound:

1) I personally lend my trust $50,000 on a commercial agreement and transfer those funds from personal account to trust's account
2) I find a house i like and put an offer on it for say $250,000 which is then accepted by vendor
3) Trust will apply for a bank loan of $200,000 (with my personal name as guarantor most likely?) for the purpose of buying ordinary units and in exchange the bank gets mortgage on title
4) I fill out a form (my deed specifies I must do this this) to apply for 250,000 additional $1 units to be issued to me, for which it has the consideration of $50,000 + $200,000 in return.
5) Trustee pty ltd ATF trust xyz buys house and pays vendor via settlement process (along with necessary fees and taxes, ignored for simplification) and has that name on the title.

Unsure about steps 3 and 4, anyone?

Why are you lending the trust $50k if you are supposed to be borrowing to buy the units?

Best to seek proper advice as too costly to fix this sort of thing.

Terry_w said:

Why are you lending the trust $50k if you are supposed to be borrowing to buy the units?

Best to seek proper advice as too costly to fix this sort of thing.

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Because trust can only get certain LVR , so it needs to get the difference from me. I suppose that can happen by lend, by gift or by just purchasing units?

D.T. said:

Because trust can only get certain LVR , so it needs to get the difference from me. I suppose that can happen by lend, by gift or by just purchasing units?

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Yes, you have to consider the most effective way to do this.

dont let lender resitriction scare peops off the right structure

I always say dont let your finance monkey ( me) determine your legal structure.

Finance is often a temporary hurdle if at all, legal structure tends to be more permanent.

Within reason I will almost always defer to the legal structuring advice if it makes sense to do so.

For some it doesnt

ta
rolf