HI, Guys, many thanks if someone can advise me on this issue: I am on $1M loan with a bank for a rental property which I bought in 2018. Two week ago, the personal account manager discussed my financial situation on phone, and asked how is my income impacted by Covid-19. I said my salary dropped by 25%. ( I am in the immigration and overseas student agency industry).
Last week, this bank requested me to fill in two questionnaires. The cover letter says it is because bank doesn’t have my sufficient dated financial information, also for anti-laundry-money purpose. One questionnaire asks for details of my income, assets and source of wealth and relevant evidence documents, e.g. if I claim I am still on salary, then need to provide IRD documents or pay slips, also asks had I ever sold other properties and details, do I currently hold other properties, shares etc.
Another questionnaire asks about “account use”. E.g. How often and how much do I expect deposit and cash put into my account, do I intend to receive or pay international payment, do I intend to use my account for other things than my personal use. ect.
My questions are: 1) Why does this bank request me this information? Does the bank want to “call back” my loan after assessing my finance (either to pay back a big sum of loan or pay off in advance)?
2) If this bank would “call back” loan and I cannot afford it, will the bank enforce a mortgage sale? This property already passed its 3 years bright line test and it seems no need to pay tax if I sell now. However, I am not sure how IRD will regard my pattern. Last year in Covid-19, I could not find tenants for long time because of lock down, I sold other 2 rental properties which I was holding for 3 years (both make profit, but one passes bright line test , no need to pay tax. Another one paid tax). Also I bought and sold another rental property in 2016 after holding 2 and half years, will IRD think my pattern to define me as a dealer(trader)?
3) If IRD would define me as the dealer(trader) for selling this property recently, but considering it is the bank would enforce me to sell to pay “call back” loan, will IRD waive the definition for me as dealer(trader) for this property sale, so no tax to pay?
4) Due to my family’ health situation, in next 5 months, I will have to sell my home house which I was holding and living for 13 years, will IRD charge me tax for this one if IRD would define me as a dealer due to sell this above-mentioned rental property? Thank you!
Last week, this bank requested me to fill in two questionnaires. The cover letter says it is because bank doesn’t have my sufficient dated financial information, also for anti-laundry-money purpose. One questionnaire asks for details of my income, assets and source of wealth and relevant evidence documents, e.g. if I claim I am still on salary, then need to provide IRD documents or pay slips, also asks had I ever sold other properties and details, do I currently hold other properties, shares etc.
Another questionnaire asks about “account use”. E.g. How often and how much do I expect deposit and cash put into my account, do I intend to receive or pay international payment, do I intend to use my account for other things than my personal use. ect.
My questions are: 1) Why does this bank request me this information? Does the bank want to “call back” my loan after assessing my finance (either to pay back a big sum of loan or pay off in advance)?
2) If this bank would “call back” loan and I cannot afford it, will the bank enforce a mortgage sale? This property already passed its 3 years bright line test and it seems no need to pay tax if I sell now. However, I am not sure how IRD will regard my pattern. Last year in Covid-19, I could not find tenants for long time because of lock down, I sold other 2 rental properties which I was holding for 3 years (both make profit, but one passes bright line test , no need to pay tax. Another one paid tax). Also I bought and sold another rental property in 2016 after holding 2 and half years, will IRD think my pattern to define me as a dealer(trader)?
3) If IRD would define me as the dealer(trader) for selling this property recently, but considering it is the bank would enforce me to sell to pay “call back” loan, will IRD waive the definition for me as dealer(trader) for this property sale, so no tax to pay?
4) Due to my family’ health situation, in next 5 months, I will have to sell my home house which I was holding and living for 13 years, will IRD charge me tax for this one if IRD would define me as a dealer due to sell this above-mentioned rental property? Thank you!
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