Hi all,
I currently have a property which i am renting out atm which is still classified as my PPOR under the 6 year CGT exemption rule. I was thinking of moving it into a discretionary trust for tax purposes. I know i would be exempt from CGT but i’ve been told that transferring it would incur stamp duty costs. This equates to about $8k…alot of moolah and making me reconsider whether its worth it. Just wanted to know is there a way to reduce stamp duty?
Also as its cashflow positive atm (and i moved it to the trust), if i bought a negative geared property under the trust would this offset the profits the trust made?
thanks.
Regretfully no way of reducing the Stamp Duty which is charged on the Transfer value or valuation which is the higher.
Richard Taylor | Australia's leading private lender
Firstly, no stamp duty concessions as Richard mention.
Secondly there may be less asset protection than normally under a trust, especially in the early years, as transactions can be reversed under the bankruptcy act in certain circumstances. So make sure you get advice from a solicitor before you do this.
Thirdly, are you sure your property will still be positive geared after the transfer? Stamp duty must be paid at market rates, but you can transfer for less – but if you do that you could be seen as transferring it under market value to defeat creditors. You do realise you will have to reapply for the loan for the transfer into the trust – even if the trustee will be the same as the individual.
But if it is cashflow positive your trust could offset this by bying a negative geared property.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for your answers guys. Seems like alot of hassle to transfer into a trust, and probably not worth the associated costs. Trouble is because its now cashflow positive the taxman is making me pay extra tax every quarter on top of what i do at the end of financial year. Was just thinking of ways to reduce this without having to buy negative geared properties under my name which is what my accountant suggests.
There are a lot of issues to consider. At least you are making a profit, so its not all bad.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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