Page 13 - Loan Structure Solutions

6) Unexpected changes are exactly that... unexpected

One of the biggest mistakes that people make when structuring loans
is to not consider the consequences of unforeseen changes in personal
and financial circumstances. In fact, they are often totally blind to the
possibility of change. However, the problem is that many unexpected
changes occur in our lifetime. Therefore, you should structure your
lending so that it’s as flexible as possible – even if you’re convinced
you don’t need the flexibility. Often, a high level of flexibility can be
achieved without incurring any additional cost – and that’s exactly what
I recommend. In this regard, it can be very worthwhile sitting down with
an experienced mortgage broker to talk about a few “what if” scenarios.

7) Where repayments come from?
The name of the bank account where repayments are taken from is
also important. The name of the account needs to match the owner’s
name – and this is very important. For example, if John owns an
investment property solely, then loan repayments must come from a
transaction account solely in John’s name. Repayments can’t come
from a joint account with his wife Sue – which is often what I see.

This is important because it
demonstrates to the ATO that John
has been making the repayments
on the loan and is therefore entitled
to 100% of the tax deduction.
Remember, the onus is on the
taxpayer to prove this point (and
any evidence to the contrary will
assist the ATO in raising more tax
revenue). If you leave room for the
ATO to argue that Sue has been making 50% of the interest
repayments you may put your tax benefits at risk. At the end of the day
it’s better to be safe (and smart) now than sorry after an ATO audit.

www.loansmart.com.au _______________________________ 11