Ethan

Trusts can actually increase serviceability in many instances.
Trusts can negative gear just like a person can
Land tax on the first dollar is only for land in NSW. In QLD a trust owning land gets a separate threshold for example.

The answer to most who ask me should they use a trust to own property is ‘probably not’.

The risk of being sued is overstated by spruikers who try to make money out of selling trusts – most of them unqualified too.

Tenants can and do sue, but it is very rare. I have been investing in property for over 20 years and no tenant has ever attempted to…[Read more]

Benny

DIfferent lawys for land tax to income tax. A property could be a main residence for CGT purposes yet not a PPOR for land tax purposes, and vice versa,

In NSW for example it is much harder to get the PPOR land tax exemption for a property you have moved out than it is for CGT.

Yes valuers actually can tell you what it would have been worth at any point in time.

It could also be exempt from CGT for up to 6 years.

Benny – there is no declaring of which property will be the main residence – until the sale of one of them.

You could do 3 things
1. Nothing, but work on getting a borrowing capacity.
2. Lend some of the money to someone who does have a borrowing capacity
3. joint ownership with someone who does have a capacity – whether direct, via a company or trust structure

But get legal advice before considering 2 or 3.

Why look at creating a trust?
Why pay PI on an investment property?

I think you should do some more reading.

One of my clients has purchased 2 psotive cashflow properties in innner Sydney. One doubled in value within a few years and was cashflow positive from day 1.

This is legal advice so best to speak to a lawyer as it relates to state taxes.

See s 12 Land Tax Act
http://www.austlii.edu.au/au/legis/sa/consol_act/lta193690/s12.html

12—Tax in cases where there are two or more owners

(1) Subject to subsection (2)

, where two or more persons are the owners of land, the same amount of land t…[Read more]

You would generally want to pay off non deductible debt and reborrow to invest. This way you are increasing tax deductions.

But if you intend to move out of the current main residence you may not want to do this.

One strategy, of many, is to buy the future main residence now using a 105% loan, rent it out gain some tax advantages and then after…[Read more]

Hi Tony

I don’t take inflation into account because working in todays dollars should be enough as long as the property and rent growth is the same or more than the inflation the passive income goal should match todays dollars – or be better.

Why not just get a second valuation, and a 3rd perhaps. You could agree that the price paid to the other party is the average of the 3.

Work it out like this
1 estimate the yield of the types of property you are after
2. reduce this by about 1% for costs
3. Divide the desired income by the figure in 2

In this case assuming you get a 5% yield, take this as 4% after costs
$250,000 divided by 4% =$6,250,000

So you will need $6,250,000 worth of unencumbered property to get an…[Read more]

I guess it gives you more flexibility to move lenders. But other than that not really.

Uncrossing is good, but it won’t help you pay off a loan any earlier.

Why not approach the same developers that have done projects in the same street?

Benny trusts cannot distribute losses but what you may be thinking of is some borrowing to subscribe to units of a fixed unit trust and the trustee using that cash to pay for the property. Those borrowing to buy income oroducing units could claim the interest against their own income. If they are individuals and the interest is less than the trust…[Read more]

Yes it is worthwhile considering it for a variety of reasons.

Costs
– conveyancing
– stamp duty (possibly depending on state)
– CGT
– GST
– mortgage discharge fees
– new loans

I think increasing the loan shouldn’t produce any tax issues if the loan itself relates to only the units. Once complete the loans can be split and the property strata titled At that point the security for each of the 3 splits can be secured by the unit it relates to.

Get tax advice.

NSW property?
STRATA SCHEMES MANAGEMENT ACT 1996 – SECT 109
http://www.austlii.edu.au/au/legis/nsw/consol_act/ssma1996242/s109.html

Yes it is possible to structure a company or a trust so that only one of you will need to give a guarantee.

Although transferring to another entity will result in stamp duty and trigger CGT it can be beneficial – especially if there is a bit of equity that has build up.