I've spend countless hours reading and trying to understand a very basic question: should I buy an investment (Commercial) property in a "Pty Company (as a trustee for Family Trust)" or directly under "Discretionary Family trust"? This is our first investment. I've two kids and my wife doesn't work, so I understand the use of Trust for using the tax benefits. It's a small commercial land and we'll not be borrowing money from any lendor for that.
In terms of company versus trust: main points that I've seen around include:
- Use Trust (without of Pty Ltd as a Trustee): as it provides 50% CGT discount benefit. It is going to be a long term investment ... so I see this as a major benefit if property price increases when we sell it.
- Use Trust (without Pty Ltd)? We don't have any other business setup or involvement in any business activities.
Accountant stated 'Use Pty Ltd" as it provides more security against litigations etc ("too many if scenarios" as he put it). And I'm kicking myself in the backside already as I rushed into setting up a company already and DFT with the company as a trustee :( But now I'm not convinced.
Please share your views!