I am relatively new to Property investing and unfortunately gone down the path of negative gearing until the realisation of positive cashflow. Hence I am now trying to set up the appropriate investment strategy before purchasing any further properties.
Has anyone had experience in the setup and using a trust for investments?
I understand there are benefits for asset protection, tax and assignment of capital and income to the beneficiaries.
However how does setting up a trust affect the borrowing ability or LVR we currently have. Compared to a trust not having any credit history?[wacko]
I have also heard of a company being the trustee of the trust, what are the benefits here over a traditional setup?[weird]
Hope someone can help.
Regards
MulderA trust does not give you any advantages in borrowing – in some cases it is harder to borrow using a trust. Lenders will take guarrantees from the trustees so no history of the trust is needed. A brand new one is ok.
A company is safer, as in some cases a trustee can be sued. If it was a $2 company, then this is safer than yourself.
It costs more to set up and more annually, so you much weigh up the cost vs risk.
Terryw
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Terry has made some great points.
There are different types of trusts to take into consideration as well.
First decide on your investment stratagie and the find a trust to suit your needs now and for the future.CATA
Asset Protection Specialist
[email protected]hi
according to ed chan…trust guru“We never purchase a property in a company because when you come to sell the property you miss out on the 50% exemption for capital gains tax and also if the property was negatively geared the losses would also be trapped inside a Company”
just another opinion
Agree with HB and Ed..
Dont buy in a Company, buy in a Trust with a Company Trustee for-
Asset Protection
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Wealth Creation“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorThanks for the advice Terryw, Cata, hb and redwing,
I have been away from the PC the last couple of days.
Your advise has confirmed a few things for me, I have sought have come to the conclusion on the following setup.Set up a discretionary trust, and have a company as the trustee of the trust, with myself and other family memebers beneficiaries, finance can then be applied for using the company structure.
The only question I have with this setup is, I would need to be a director of the company in order to achieve finance, as a director arent I still exposed personally?
Regards
MulderAs director you can be personally liable. If the director has no assets or is in debt it is an advantage. Some creative morgages are great here.
CATA
Asset Protection Specialist
[email protected]hi mulder
couple of things
Trust with a Company Trustee gives you another layer of protection some one must sue the trust, then sue the company and the sue the directors and they all must be seen as being neglegent in ther duties to win if you can put up 6 walls ( you can’t with out it killing you on cost) its better at some stage you have to be happy with risk.
the structure you are looking at is very common put so are falcon if you want a ferrari a falcon is not much good you need a structure that suits what you want to do
example
buy and hold
buy and sell
build and sell
build and hold
negative geared property
posi geared property
and any conbination in between
there is no trust yet that takes in all these.
so its a bit difficult to tell you which is best.
find an accountant that knows trusts and ask him when you have decided which of the above you are going to be doing.
as for hb’s
according to ed chan…trust guru
not sure I have heard ed say he’s a guru
and depending on the structure.We never purchase a property in a company because when you come to sell the property you miss out on the 50% exemption for capital gains tax and also if the property was negatively geared the losses would also be trapped inside a Company.
the company can be part of a structure and this is not correct
yes you do loss 50% the capital gain if in a company but you would not use this part of the structure for build and sell and the losses again is done via a different type of trust.a trust is an agreement it is not an entity in its self.
you need an entity to control a trust and this is where it can be very creative.my .002
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If you want to get involved in some of the projects I’m involved in email to [email protected]Thanks both of you,
As always there are so many variables, I agree at some point I am going to have to live with and be happy with a certain amount of risk.
My invisaged path is for positive cash flow investments with a focus on Lease Options (yet to find one though) and then perhaps development at a later stage.
The search now continues for an account and/or solictor to assist with the setup.
This forum has been a great help thank guys.
Mulder
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