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Property Trusts1 2trustieone [37 Posts] I would like some feedback re setting up a property trust first and then buying an IP or 2 and place the properties in the trust,my thinking is that i am better protected this way,i also understand it is better to do it early as it may be too costly later to transfer the IP properties to the trust . 1 am i and my assets better protected Any feedback appreciated Terryw [6654 Posts]  1. yes Other things to think about: Terryw   luke1982 [8 Posts] If you already have a property in your own name it can be costly to change to a trust as you said, however you can do an equity transfer. Basically as it pretty much says, you can protect your equity in your property that's in your name by giving your equity to your trust and that money can be used to buy more property through your trust. trustieone [37 Posts] Terryw wrote: 1. yes Terryw [6654 Posts] Hi In NSW Land Tax is 1.6% of the land value. Individuals get an exemption on the first $350,000 (approx) of land. But trusts don't get this exemption (except special trusts such as some unit trusts). So if you have a $350,000 property (land value) in a trust it will cost you $5,600 per year extra. That is a lot of money. Trusts need annual tax returns done. But if you think about it, there is not much extra work at all. If you purchased a property in your own name, the accountant would need to take this into account anyway. It is just a matter of them filling in the details on the trust tax return rather than your own. Not much work at all, but they will probably claim it is! If you purchase via a trust you cannot get the FHOG for this property, but may be able to get it in the future for one in your own name. To learn more about trusts search the web and read as much as possible. There is a good book called "Trust Magic" by Dale Gatherum Goss which is easy to understand and there are some good websites such as www.taxlawyers.com.au ; www.lawcentral.com.au etc Terryw trustieone [37 Posts] Terryw wrote: Hi Terryw [6654 Posts] Company structures are not recommended for appreciating assets as they don't get the 50% CGT reduction for assets held more than 2 years - so that means you will be paying a flat rate of 30% tax for captial gains. Whereas with a trust you will be paying a maximum of 24.5% and probably a lot less. Terryw trustieone [37 Posts] So is there a right or wrong way to hold several properties to maximise your returns and reduce your exposure to liability/ risk, or is it not clear cut because of so many variables. god_of_money [207 Posts] Hi All, Terryw [6654 Posts] I think it also depends on where you are buying properties. Different states have different rules. It is very painful in NSW now to hold property in a trust. But land tax is deductible and there are many other benefits of a trust and the other tax benefits may still mean you are paying less tax overall. Terryw trustieone [37 Posts] Thanks d_angstestra for you imput too,did Chan & Taylor elaborate why a trust should be set up in the begginning? At the end of the day there must be a more "correct" way to begin this venture that will give asset protection and liability protection.
Trustie god_of_money [207 Posts] Which one has better protection... Discretionary vs. Unit trusts...? P_I [6 Posts] Terry Having properties both in trusts and out of trusts my answers would be....... 1. depends you need good advice and use the right trust for your situation Despite hundreds of messages on web sites like this one and advice of many accountants you DEFINITELY can negatively gear your property while using a trust and you can offset losses against your income - have been doing it for a few years. You need good informed advice by the RIGHT people, have the RIGHT trust and carefully arrange the finance meeting all the required conditions i.e. who the name of the loan is taken out in with a clear link to purpose - NOT in the name of the trust or trustee. Banks have officers who understand these arrangements and can take a mortgage over a security and lend the money to someone else fulfilling all the requirements of negative gearing. Terry - ask your accountant god-of-money mentioned Chan & Naylor - they are definitely one of the accounting firms who can help you set it up correctly and know what they are talking about. BTW if you own several properties in a single state, in some states, you have the potential to SAVE land tax by having the properties in seperate entities. Cheers Qlds007 [4379 Posts]  I have over 45 of my properties in a variety of Discretionary Trust structures. Unless you use a HDT or Unit Trust "you DEFINITELY CANNOT can negatively gear your property while using a trust" Cheers Yours in Finance god_of_money [207 Posts] So...does HDT or Unit Trust provide the same asset protection ability vs. Discretionary trust? I heard that ATO is start to crack on HDT???? Qlds007 [4379 Posts] They are GOM hence for asset protection you would always use a DFT. Cheers Yours in Finance god_of_money [207 Posts] Hi Richard, Thanks for your input... Do you anything about tax ruling on HDT? Has anyone being audited by ATO yet? Cheers Qlds007 [4379 Posts] Sorry GOM missed your last post. Yes a DFT incurs Land Tax in Qld also. The following link may assist you in understanding more about the ATO audit of HDT's http://law.ato.gov.au/atolaw/view.htm?DocID=TPA/TA20083/NAT/ATO/00001 Cheers Yours in Finance Hot property [8 Posts]  Qlds007 wrote:
Sorry GOM missed your last post. Thanks Hot property [8 Posts] Can someone out there help me I need a Property accountant in Brisbane Gold or Sunshine coast if anyone could recommend. I have a commercial building in a trust...don't know what type and wanting to buy more but I need someone who can help me set stuff up wisely Thanks Thanks 1 2 |
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