The $1M is capital gain.

How would you distribute it to maintain minimum individual tax? Family Trustee are husband, wife and 2 kids under 16 yo.

Very interested in your response.

Thanks

regards
ptn

A friend came to me with a challenge. How to distribute $1M from his family trusts and minimise tax.

He bought a IP in 2005 in his trusts and sold it recently. After all expenses, he has a balance of $1m in his trust which he wish to distribute over a period of time.

Possible scenario
1. Wife $100k, Husband $100k, leave $800k in trusts…[Read more]

Thank you for all the response.

With regards to intention, we build those 2 units with the intention to live in.

We sub-divided the land into 3 lots; 1 existing and 2 new units.
1. We sold the existing unit. We should get the 50% discount CGT.
2. My brother moved into one of the new unit in April 2014.
3. Our family was supposed to…[Read more]

Quick question, so I understand that if I hold onto the IP for more than 1 year, 50% of the gain will be taxed only.

My brother and I purchased an IP 4 years ago. In Sept 2013, we commence construction of a new unit, subdivided and subsequently sold the new unit in early 2014.

Are we entitled to the 50% Capital gain tax…[Read more]

Just wondering,

The trusts purchase a new house for $300k. There is an $8k depreciation schedule p.a
Assuming there are 1 x Trustee (Husband) + 3 x Beneficiaries (Wife + 2 kids).
Let’s say I create 300k units in this HDT to buy this house.
Let’s say the rent is $300pw ($15600pa less agent)
Let’s say the interest at 7.5% = ($22…[Read more]

Following your advice to research more, I bought a book called ‘Family Trusts’ by Nick Renton (as recommended in previous forum). I have to admit the first 8 chapter are boring or going around in circle (a drag). I hope the next few chapters will pick up.

From what I understand so far, trust isn’t giving me any advantange at all apart…[Read more]

Regards
ptn

Ouch. This is going to be…[Read more]

Another question, if my mother in law is not a permanent resident in Australia, can she still be a trustee? IE. She is a tourist in Australia?

And the same question goes for a company shareholder?

Thanks

Kind regards
ptn

Your advice is very valuable. I am still pondering between a company (expensive setup and ongoing) or a family trust. I need to know the best way forward given the following scenario:
My family of 4 + my mother in law (5 trustee) . We buy an IP using this new family trust. If for some reason, we decided to remove my mother in law…[Read more]

I don’t want to approach an accountant or a lawyer at it will cost me $$$ just to say hello.

Thanks TerryW, you’ve given me a bit more confident in buying the family trust.

Regards
ptn

I like to buy this family trust online. Any advise?

http://www.lawcentral.com.au/CreateDoc/createlink.asp?docId=17

My intention is to move one of my IP into this trust.

We have a family of 5 (including my mother in-law). Hope it’s not going to complicate the process.

Please let me know your thoughts.

Thanks
ptn

Thanks

Regards
ptn

Just a thought

Regards
ptn

I like to put some IP into the same trust to dilute the 80/20 rule.

Also, if I add my sister as trustee into the trust with her contracting income to further offset the 80/20 rule, how hard would it be in 2 years time to remove her from the trust ?. Assuming an IP exist in the trust.

Thanks
Ptn

[offtopic] off topic a bit but can I have a family trust – Discretionary trust with the beneficiary to include my nieces and nephews?

Just for tax purposes where $1400 can be a write off allocation per year.

Curious
ptn

Nothing prevents you from selling your old and new one within 6 months.

Just wondering how you intend to live there during the development of the 2 units.

hope this helps.
ptn

If you move in and claim the place as your PPOR (Primary place of resident) than build the duplex and sell it, you wont have to pay captical gain. But if you build it before moving in, then you’re looking at halving the cost / captical gain. IE, Paying CGT of $40k.

I am not an accountant but I’ve done this before.

Regards
ptn

ptn

So if I have my own childcare at home; where my company is operating, I can claim all the expense? IE. A live in nanny?

ptn

Regarding your poor cash flow, you should consider loc docs loans to buy more IP and look into living off equity to fund your creative ideas.

Let’s say you have $420k asset. You have a mortgage of 200k and you require 80% LVR leaving you about 120k worth of usable equity.

Let’s say you take 30k as living expense (plus single mo…[Read more]

Rich people send their kids to child care and claim the fee as a company expense; at lease from the stories we hear.

How do they do it?; Could it be that the child is a director of the trust and is an influent to the company’s success? Therefore require child care as education???

Curious
ptn

This will make my cash flow a bit more attractive now.

ptn.

I am against the idea of partnering as it causes too many disputes.

With your extra capital, I suggest you look at opening a trust or company with the intention to renovate or build. You should hire people to do the work and focus more on management.

I know you may have heard this every where but KISS (Keep It Simple Stupid) will…[Read more]

Congratulation on your new found skills.

3 years to renovate a house is a long time. Nonetheless it’s experience in the making. Well done.

Regards
ptn

Has bank west response to your email yet? [cigar][puke][glum2][sleepy2][upsidedown]

Thanks

Regards
Ptn

I’ll look forward to seeing bankwest reply to your email.

Kind regards
ptn

Thank you for that informative description. I read something like this before but was a lot more complex than your explanation. Makes Sense now.

Cata / Terry, Can you please also answer my earlier ?

What happen if the IP in the HDT appreciates 50k in value, will you need to create more units in the HDT if you want to use this…[Read more]

Is it possible to convert a normal DT into a hybrid DT one day if the need arises or is this dependent on the trust document?

Your questions are very meaningful (as always), I am keen to see Terry answer this important question too.

Regards
ptn

From memory, Bankwest have done 95% for one of my clients with a hybrid trust.

Sorry if I am repeating myself but need to know exactly.
Your client, did he have a company trustee?

Cata, I am not planing to do any commercial business in my trust and asset protection is not a point of interest now. Beside, just create a company…[Read more]

Another important question,
What happen if the IP in the HDT appreciates 50k in value, will you need to create more units in the HDT if you want to use this equity? and how does the bank response to the refinance?

How much paper work is involved in creating more units in the trusts for the above case.

Do bank lend upto 90 – 95% if you…[Read more]

I also bank with bankwest.

Your earlier statement makes me more confused. Do bank like HDT with company trustee? or they prefer HDT with out a company structure?

Don’t worry about the land tax component, it’s another topic of discusion elsewhere.

Thanks
ptn

Thank you for the run down. My purpose is not for security or asset protection; but rather to reduce my aggregated land tax bill and at the same time have the ability to negative gear.

My conversation with GG was short (1minute) where he said that a HDT setup includes a trustee company. He insist that you cannot have a HDT without a…[Read more]

Gatherum Goss said the HDT MUST have a company structure which include corporate trustee. There is other way. He goes on to say that the banks will not accept anything less than a HDT with a company structure as it’s registered in the ASIC.

How many ways can a HDT be created? I am more confused now.

regards
ptn

Gatherum Goss charge $2700 to setup the hybrid trust. You quoted $1100. Is there a reason for such price differences? Are there online application that are a lot cheaper?

Thanks
ptn

I’ll give Dale a call early next week. His site seems interesting at first glace.

Thanks

Regards
Ptn

I originally wanted to open a Hybrid Trust but after talking to my banker at Westpac last week, he seems awfully shy and hinted complications. He said a DT is fine but HDT requires a lot of paper work and may have loan complications especially if some deeds are incorrectly spelt out.

As asdf stated earlier, a HDT requires $2k setup…[Read more]

Been speaking to my banker about putting my next IP into a DT and he said that I need to personally guarantee the DT loan. How I structure the accounts is up to me. Trust has a loan of 245k and I have another equity loan of 120k. The loan is in my name and it’s for IP purposes.

I’ve emailed my accountant a few times and have not got…[Read more]

I don’t own any Discretionary Trust; my aggregated IPs are reaching the $900k excluding my PROP and I’ve been investigate ways accumulate more IP but at the same time minimise my Land Tax bill.

At 900k I am paying $2680. If I buy an IP worth 350k, my next land tax bill will be $2680+$3500=$6180!!! but if my next IP goes into a DT…[Read more]

I bought into an apartment 3-4 years ago and I am still down by about 100k. But I haven’t sold it so it’s only paper loss… if the market goes down another 100k, I am still at paper loss of 200k but I won’t sell. I know that property will appreciate sooner or later.
Just don’t talk to that property banker for a while.

Just thinking…[Read more]

Like you Elkam, I’ve bought Melbourne IP only and are forced into paying large land tax bill. I like to understand what happen if you have 3 DT each containing a 300k mortgage; are you forced to pay aggregated amount of 900k or just a land tax bill for each 300k…[Read more]