Forum Replies Created
Hi RT,
This is really a question you need to discuss with your accountant. There’s also a few good books on the subject and many posts on this site (do a search).
Anyway,
Trusts are a structure whereby assets are owned and controlled by one party (the trustee) for the benefit of another party or parties (the beneficiaries). This means that the trustee controls the assets, but that any income from the assets doesn’t go to the trustee but to the beneficiaries.
The good tax implications are that the income can be distributed at the trustees discretion (in a discretionary trust) to any of the beneficiaries. In practice where there are beneficiaries in different tax brackets the distributions will be to whoever is in the lowest tax bracket, thus saving tax overall.
The bad tax implications are that losses (in a negatively geared situation) are “locked” in the trust and can’t be allocated to individuals to offset other income.Asset protection is provided by the fact that the assets are owned by the trustee on behalf of the trust. If an individual (beneficiary) gets sued they can’t lose the assets as they don’t own them. If the trustee gets sued they don’t lose the assets as they own them on behalf of the trust not themselves.
Hope this makes sense, I’m sure someone else here can probably explain it better.
Rod.
Hi Daisii,
What structure you should use depends on many factors, if you’re only planning a few properties then it’s probably not worthwhile. If on the other hand you’re looking at emulating Steve and Dave then you really should try to start out with the right structure.
This topic has been covered several times here on the forum. You should be able to find some answers if you do a search.
Rod.
Hi all,
I’m just looking at a QS report for one of my IPs (this was done by Deppro).
This property is a 3BR bouse built in the 70’s with some minor renovations done around 1996.Total cost of property $143365
Value of plant $14170
Capital works allowance $6807
Land (from rates notice) $29911
Other $92477.The depreciable amounts are the capital works (from the 1996 renovations) and the plant. The plant value was determined by an onsite inspection by the QS and includes items like carpets, ceiling fans, curtains, lights, stove, tv antenna, hot water service, garden sheds.
the other amount is the amount ineligible for depreciation.
This report gives a deduction in the first year of $5851, $2900 in the 2nd year, this rapidly decreases to $365 by year 6. This is using the diminishing value method. The capital allowance is $200 per year, which lasts for 34 years.
The report gave a full breakdown of both the diminishing value and prime cost methods for 40 years.
I consider this well worth the $440 (incl GST).
Rod.
Hi,
My motivation is similar to yours, I just want to be in the situation where I can choose how to spend my time without having to work 5 days a week to feed myself and the family.
Rod.
I disagree, it could well be worth while.
A QS report should cost around $400 and it’s tax deductible. Ring up a couple of QS’s and ask them some questions. They should be able to give you a rough idea of whether it’s worth pursuing.
Even if items like carpets, curtains, hot water systems, stoves etc are a few years old, you have still effectively paid something for them. – This is the amount you can depreciate.
For instance on a $100K property if the land is valued at $40K, the QS may determine that the value of the building is $35K which leaves $25K of depreciable fixtures and fittings.
Rod.
The company won’t pay CGT in New Zealand, but if any of the gains end up being distributed to you as a dividend then you’ll pay tax on them in OZ as foreign sourced income.
Rod
Hi Celivia,
When I’m buying I much prefer to see a real price.
The $200,000+ type figures are real pain because the amount of the + varies a great deal from agent to agent. My view of the + would be about an extra 10-15% but I know of at least one agent who expects around 50% extra.
The buyer ranged deal, well I’d just guess that the middle of the range is their real asking price.
Really you need to do your own due diligence as to what’s a fair price and don’t go above it. Don’t get conned by the agent’s tricks and try not to get emotionally involved.
Rod.
Hi Leigh,
Yes, seeing the same questions again and again can get a bit tiring. You’re not the only one who was staggered at the increase in volume after the launch of the book.
Good luck to Steve, he certainly deserves it and he and everyone at this site has certainly made me think a lot harder about how I do things.
I was just idly wondering though whether there reachs a point where the publicity becomes counter-productive.
Another thing I’ve noticed recently is that the emphasis of posts on the forum seems to have changed. When I first started reading (late last year), there seemed to be a much higher number of “wrap related” posts. Now the topics are predominantly on buy & holds.
I’m guessing this is mainly because that is what’s mostly in the book, but has the recent bad publicity for wraps and the difficulty in getting full disclosure loans for wraps had an effect as well?
Rod.
My 2 kids make enough noise for 20!
There’s no way I could handle any more.
Rod.
Hi westan
Good points. I just hope that those watching will get the full message and not just rush out and buy the first “cheap” house they find. I think it’s a bit hard to get the full “due diligence” message across in a TV show.
Hopefully those who do decide to make a move will have enough sense to do appropriate research first.We’ll probably be talking to some of them here on the forum next week.
Rod.
Yes,
That’s the impression I got from the promo.
I was just thinking about the anecdotal stories of country RE agents getting overrun with city buyers just after there’s been a seminar. Will all these media appearances encourage more of this behaviour?
Rod.
Hey richmond,
This isn’t a commercial post is it[?]
We know who you work for.[
][][][]Rod.
Well said Andrew,
We all owe a great thanks to Steve and Dave for creating the site. And also to all of the moderators who do an excellent job.
thanks,
Rod.
Thanks Slim.
Nhill???
I agree with westan, it’s a long drive. There’s probably a few other towns in that part of the world with more going for them.
Rod.
quote:
Another tip for retirement day was if you are over 50 and have held an (active)asset for 15 or more years, when you sell it is TAX FREE!That’s interesting – where did you find that?
Rod.
Hi Jim,
I meant what he writes in the Sunday Mail. I don’t usually bother buying it here in Melbourne [
]Rod.
Hi Jim,
Can you post a summary of his response here?
thanks,
Rod.
How can TV be better than this[?]
I’m sorry I wasn’t online last night.[
]Rod.
quote:
one very simple question can we add beneficiaries after we created the discretionary Trust ? ( lets say after 6 month )Hi Amit,
I believe adding beneficiaries should be covered in the trust deed.
Rod.
][
