Change lenders now and get it fixed up would be my recomendation.

Are you worried about a possible future separation? if so then the courts can make property orders no matter whose name the property is it. Just maintain evidence on how you have contributed to it and not just financial- eg painting the front fence, dealing with an agent.

Hi Tracey.

Say Tracey purchased $100,000 in shares and these dropped and she sold them for $40,000. She would have a Capital Loss of $60,000. This loss cannot be used to offset her income because it is capital in nature.

Tracey also owns 3 properties.
A. In her own name
B. In her company
C. in her trust.

If she sold A and made a $60,000 CG how much CGT would there be? Nil because the gain can be offset by the prior loss.

If she sold B and the company made $60,000 how much CGT? The company would pay a CGT of 30% of $60,000 = $18,000. The profit would be $42,000. This could be distributed to Tracey. But it will not be a CG will be dividends. Because tax has been paid the dividends would be franked and Tracey may be able to claim some franking credits, but this is not a CG and so cannot be used to offset the loss.

If the trustee of a discretionary trust sold the property and made a $60,000 CG then the trustee would consider all the beneficiaries and may decide to chose to distribute this to Tracey as the income would still be CG in her hands (ie retainng is character) and so she could use the loss to offset the gain so no CGT is payable.

(assuming sold within 12 months so no 50% discount and may other variables left out).

I cannot understand what you are talking about sorry.
Sounds like you are jumping to conclusions.

Don't talk equity, talk figures and it may make it clearer. Money in an offset account is not equity – it is cash. Equtiy is the difference between the value of a property and the loan outstanding on it.

With trusts the income retains its character so any CGs could flow through to indivudual beneficiaries of a discretionary trust. This is different to a company for example a capital gain would still be a capital gain but when it gets distributed it will change form to that of a divdend. So if you had a shareholder with a capital loss (from a previous venture) then the dividend couldn't offset the loss. With a trust it could.

But, if your intention is to construct and sell then CGT wouldn't apply it would be pure income tax.

Incidently, there is no right answer on how to set up. It is more an art than a science and will depend on many many different factors.

Roddy1,

What is the purpose of your statement?

aLSO,Whats up with this forum? Typing in word and then pasting here results in the above stuff…

What is in the contract? Tenant or vacant possession?

There is also the argument that as the trust is a discretionary trust (in most cases) the trustee of the trust has discretion as to who to distribute the income of the trust to. Therefore there is no guarantee that the trustee is going to distribute anything to you, the loan applicant or trustee or guarantor. So having a trust could actually hinder your borrowing capacity.

I have never seen this line of argument used by a bank though. They will generally consider the past performance of the trust and assume this will continue.

You must weigh up whether to save tax now or later. I suggest you do the sums.

The more deposit you put in the less the LMI. Usually no LMI under 80% LVR.