Trusts do not effect borrowing ability at all.

When you set up a trust, the trustee, or the director of the company that is trustee actually borrows or guarrantees the loan. So it will all come down to the credit worthiness of this person.

Once the trust has beens established for a while the assets and incomes will help, but you would have had…[Read more]

Here is an example.

$100,000 property with $100,000 loan
LVR = 100%
Equity = nil

after 5 years
$150,000 property, loan $100,000 (interest only)
LVR = 100,000/150,000 = 66.67%

You can generally borrow up to 80% of the value without incurring LMI.

So in this situation you could increase the existing loan to $150,000 x 80% = $120,000. But you…[Read more]

I cannot see anything wrong with accountants and FPs being in the same firm. might work out cheaper that way anyway.

I don’t think there are any problems with accountants and trusts either. Accountants study different aspects of trust to solicitors, but I guess it all depends on the person’s experience and additional training. Some accountants…[Read more]

Sounds messy and could be costly if you want the accountant to work out the interest you wish to claim. Why do you want to do it like this?

Terryw
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Yes.

One of my Discretionary trust deed’s states that a charity is a beneficiary.

Charity is defined very broadly in the deed too, including

a) any body, corporation or unincorporated association being a church, religious institution, charity or benevolent institution and gift deductible bodies and any charitable purpose

b) the trustee (in its…[Read more]

Superfunds pay 15% tax, so yes you would be paying less. But is this the best way? You cannot mortgage it, and leverage off the equity.

Do you have a loan on your own home? If so, maybe selling the investment house to your own trust may be an option. Use the funds released to pay off your home loan, and you or the trust (depending on structure)…[Read more]

Hi Sally if your business is a sole trader, then you are the business. You cannot really borrow money from yourself.

Terryw
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Yes.

One of my Discretionary trust deed’s states that a charity is a beneficiary.

Charity is defined very broadly in the deed too, including

a) any body, corporation or unincorporated association being a church, religious institution, charity or benevolent institution and gift deductible bodies and any charitable purpose

b) the trustee (in its…[Read more]

Hi George

Thanks for sharing this with us. It just shows what can happen to people – even if careful.

But don’t worry too much. This is probably just a bluff. It is easy to send out a letter to scare someone. Some people would be so worried they pay up.

Just because you have received a letter doesn’t mean that you will be sued. And even if you…[Read more]

also check out http://www.gatherumgoss.com

Terryw
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Parramatta
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I am surprised that you cannot find anyone. It shouldn’t be too different.

Which state are you located in?

(And can you tell us why a company?)

Terryw
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Hi

‘business’ is a vague term.

Most people who say business are probably actually sole traders. If you just have a business name, then you are probably a sole trader. This is not an entity. The business is yourself, legally.

But if your business is a company, then this is a separate legal ‘person’.

If this is the case, then your company would…[Read more]

If you are using an accountant, you have about 10 months to lodge your return. I have know many people who extend this to years!

It will all depend on how much your profit is, how much you are vendor financing and how long your vendor finance loan is going to be. I imagine the CGT wouldn’t be too much of a burden.

If your classed as a trader,…[Read more]

And for all those DIY Trustees out there, if you are going to add or remove beneficiaries this can be extremely dangerous to your wealth.

In many instances this can cause a resettlement of the trust. If this happens then it is the same as winding up the old trust and creating a new trust. And all the costs of stamp duty and CGT for transfering…[Read more]

I beleive you should always look at using trusts. If you had a trust set up, then you will always have the option of distributing the profit to the lowest income earner, and reduce tax that way. With a trust you can change the distributions each year as people’s taxable incomes change. And as a last resort you could always have the option of…[Read more]

How to calculate the figure will be included in the terms and conditions of the loan. Ask your lender for a copy of the terms and conditions booklet.

Basically, they will work out 2 loan schedules. One at your fixed rate and one at the rate when you get out of the loan. Any shortfall in interest they would have received would be payable as a…[Read more]

Yes, I have heard similar arguments when asking.

Basically you will have to reimburse the bank for the interest forgone in letting you out early.

Terryw
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Parramatta
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There are many things to consider, eg how many trustees? I see a lot with husband and wife as trustees, but I don’t think this is a good idea if you are investing in property as it can lead to each giving a guarrantee. This creates more risk and decreases borrowing capacity.

There is also the ability to name beneficiaries. But why name someone if…[Read more]

Yes, that is a potential draw back. But at least you will not have to pay the CGT until you lodge a tax return – and that could be years away

Terryw
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If you are personally trustee, it shouldn’t be a problem. The title will be in your name and the loan will be too. No need to have the loan mention the trust. I assume you have a hybrid, so having the loan in the trust name will defeat what you are trying to achieve anyway.

If you have a company as trustee, it gets a little more complicated. The…[Read more]