Most of the activities funded by the Block Grants for Community Development (CDBG) program are designed to benefit people with low and moderate incomes (LMI). This benefit can take the form of housing, jobs and services. LMI stands for mortgage insurance for lenders and is a single insurance payment that protects the mortgage provider (banks and lenders) with an additional level of protection against mortgage default. The ATO currently states that you can apply for the LMI as a tax deduction when buying investment property.
Paying the LMI separately at the time of settlement will require that you have the funds available and that you provide the lender with an explanation of where the funds came from. The LMI is considered a purchase expense that is deducted for several years, not all of it during the first year. A person's income is considered an LMI based on how it compares to the average household income in the area. Avoiding LMI can save you thousands of dollars.
You can avoid having 20% of the property available at the purchase price. The LMI is a term used by banks, lenders, mortgage brokers, accountants and financial planners when talking about buying a property and the requirements of its loan.
