Q: I own my old home outright (The house in my name ) we want to knock it down and rebuild a single storey, We are also have our names in a property in which to help our only daughter to buy, Currently we are living in our daughter new home because our old home is unsafe to live in.
My daughter and us have borrowed 1.2mil in order to buy her dream home, my wife and myself total income approx$95k
When my daughter get married how do we obtain a construction h/loan to build the old house ?Rob

Hello Robert,

I know your question is about Loans but there are some severe Capital Gains Tax (CGT) issues for you here.

You can only have 1 principal place of residence exemption at any one time. What does that mean? It means if you sell your original house and it is considered your home then you pay no tax. If it is no longer considered your primary home then you will have to pay CGT for some period in which it no longer becomes your primary residence.

Likewise, because you and your wife and your daughter's name is in the new house it means that if the dream home is ever sold then you may be open to capital gains tax on that property.

This is not something I can advise over the net but I suggest you go and see a tax accountant to make sure you do things to eliminate the CGT issue OR worst case you know in the future you may have a tax liability and what that looks like.

AJ

HI Rob,

There are a number of things to consider here such as, when your daughter gets married, do you and your wife intend to stay on the title and loan with your daughter or will she and her husband look at refinancing under their names only ? and will they be able to? This may also have some tax or transfer implications.

Also different lenders will have different policies around how they will assess your current liabilities i.e. some lenders may accept your portion of ownership and debt whereas others will include the total $1.2 million loan as your liability in their assessment.

This information is general in nature and I would need to review your circumstances in more detail to advise what options and borrowing strategies might be possible for you.

If you would like to explore your options further, please don't hesitate to reach out to us.

Cheers,
Frank

Robert. Hi. Are your names on title to your Daughters home, or perhaps you have just provided a guarantee under a family equity policy.
If it is the later, there may not be such a problem.
Please give me a call for a chat.
Regards
Ken Olds
Customers First Mortgages & Insurance
1300 ASK KEN (275 536)