Trust Tax benefits

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Hi, this is my first post here so can someone help me, I have decided when I buy my first investment property I will buy it ‘in trust’, how does this affect my personal tax if the property is negatively geared. Do I personally still get the tax breaks, or is it the trust that gets the benefits? Hope this question makes sense.

Thanks

Snivag

Hi Snivag

Firstly welcome to the forum and I hope you enjoy your time with us.

Depending on what type of Trust will determine who receives any potential Tax benefit.

Most poeple use a Discretionary Family Trust and this is one of the downsides that the losses are closeted within the Trust and cannot be claimed personally.

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

and depending which state you buy in pay your land tax bill every damn year with no threshold allowance ---- damn I hate paying this bill!

But in saying this there are still a lot of important pluses to DFT's.

Richard Taylor - richard@tayloredfinancialsolutions.com.au Tel: 07 3720 1888
Residential Mortgage Broker providing structured home loan advice for investors and owner occupiers all over Australia.
Thinking of buying your next investment property using a SMSF. Email me for a copy of my SMSF EBook.

For tax purposes a trust is a separate entity. So it will not affect your personal tax at all, unless you receive income from the trust.

Any losses in the trust will be trapped there and cannot be used to reduce your personal income.

Terryw
Finance Broker
Solicitor

Technically a trust is not a legal entity - it is a structure. The income needs to be transferred (distributed) to a legal entity which then pays tax at it's own tax rate. The losses stay in trust however can be carried forward and deducted from futures profits.

Thats correct, but for tax purposes it is treated as a separate entity. Trusts are required to submit tax returns etc.

Terryw
Finance Broker
Solicitor

Yep - YEARLY Land Tax bills and higher accounting fees. Just gotta love the invention of Trusts!

Better than losing your PPOR because some tradie fell off you PI roof...