If my partner & I buy an investment property together where I provide the deposit via a line of credit & she provides the main loan (80% value), what would be the best way to structure ownership to ensure we both claim our % of interest in our own names?
I have a line of credit to cover costs and deposit.
My partner has the servicing for the loan.
I’d like to claim the interest deductions in our own names apportioned to our own loans for the IP.
Is this possible if purchased under a single name (my line of credit won’t need any security on the property) Or do I have to also be on the title to claim deductions? For land tax reasons, a single owner would be in our best interests.
there needs to be a "nexus"between the outgoings (the interest) and any income or gains on the property
(the ATO LOOOOVES the word "nexus".......it gives them a sense of superiority to be able to spout Latin at people)
To translate this into Australian, you need some skin in the game mate!!! Unless you are holding the asset at risk, you dont get any benefit from taking out a loan.
so, if your partner owns the property, and you have borrowed some money to acquire it, that loan has no tax benefit for you, and none for your partner either.
Given what Big Hearted Bill Shorten is proposing, I would suggest that the window on having any sort of negative gearing fun is closing fast. And that also presupposes his promise to "Grandfather"existing arrangements once they get in. Because there is NOTHING to stop them from selecting a different date than election day to "grandfather"the negative gearing provisions........
So, If you dont have one already, I think you should find yourself a good bean counter, and make some time to discuss what you are doing and why you are doing it. I have seen a number of people get REAL excited about ripping into something just to lock in some perceived negative gearing nirvana, without having a long hard look at the merits of the actual investment.
I presume that you are savvy enough to avoid investing in bridges and opera houses PJM, and I reckon you probably do have an accountant to help you out. but in case you dont, (and for the benefit of anyone else reading this), go see someone to help you out before you load up to something that may or may not be the best thing since sliced bread.
there are a number of different structures you CAN use and SHOULD consider, apart from owning the property as joint tennants or tennants in common. This is where a good bean counter can pay for their fees ten times over......by helping you pick the best structure for YOU!!