I would say the builder is probably correct with this one.
Why did you agree to that clause saying they would not get the OC?

How did the vendor take money from your account?

Sounds like no body has paid the council yet to me. You probably received a credit for the vendor’s share up to settlement and you have to pay this plus your share to the council.

Best to check with your lawyer because if you don’t pay the council you will end up with a default judgment on your credit report. You are the owner and therefore the one liable.

Usually at settlment, in NSW at least, the purchaser will take into account the unpaid rates etc and receive a credit for this at settlement from the vendor but the new purchaser will actually pay the rates. Sometimes a cheque is requested from the vendor made out to the council and this is forwarded to council for payment after settlement.

Because this is legal advice a bit out of the grasp of a conveyancer – whose job is to transfer title.

If you have settled then there is not much point in talking to a previous owner.

Seek legal advice before the trust does anything.

You will probably get a cheaper rate by drawing from your home loan and on lend to the trustee but many legal, tax and lending issues to consider.

You could potentially lend your personal money to the SMSF to do this, but watch out as this could result in NALI income non arms length income which would be taxed at 45%.

read some papers by lawyers
A good one is
http://www.13wentworthselbornechambers.com.au/wp-content/uploads/2016/10/2016-SMSFs-and-Property-Development.pdf

and
https://sladen.com.au/news/2014/9/8/smsfs-engaging-in-property-developments

Beware of anything written by a non-lawyer.

pascoe_82 wrote:

Sorry Terry I don’t think I follow. Could you please explain further?
I thought keeping the cash in an offset tied you your PPR would be most beneficial as this interest is not tax deductible?
Cheers
Rod

It is the most beneficial. But what happens if you take the cash out of the offset and use it for investment properties?

Yes the valuer can access and do the valuation. But to get formal approval the titles really need to registered as otherwise what do they put on the mortgage documents.

I got a valuation for a client the other day for a subdivision that hasn’t been registered yet.

Similar to Corey, I would borrow as much as possible and buy a main residence and then debt recycle the debt down.

This will have tax and other benefits
– nice large CGT free asset going forward
– no rent being paid
– owner occupied rates on investment.

e.g your borrowing capacity is $600,000. You could buy a property for $750,000. Use an 80% loan of $600,000. Split it appropriately form the start – perhaps one loan of $200,000 and one loan of $400,000.

After settlement pay off the $400,000 loan and reborrow this to invest. Interest is now deductible.
Pay all wages and rents into an offset account on the $200,000 loan remaining as this is not deductible. Pay off the remaining $200k asap and reborrow that to invest further.

But this is legal advice and a broker shouldn’t be giving advice on trusts. An accountant couldn’t even advise on trusts like this and financial planners even less. Best to leave trusts to the lawyers I think.

Your definition of trusts is wrong. A trust is a legal relationship where one person holds property for the benefit of another under obligations. A trust may only need an ABN if it is in business.

A discretionary trust is a type of trust in which the trustee has discretion as to which beneficiary to distribute income and/or capital to.

Asset protection with a discretionary trust arises from the bankruptcy of a beneficiary. The assets of the trust are generally not property that can fall into the hands of a trustee in bankruptcy. If the trustee is sued, however, the assets of the trust will be at risk because of the trustee’s right of indemnity.

“Beneficiaries not being registered in the trust deed” – this doesn’t make sense. A beneficiary doesn’t need to be registered in the trust deed. A person just has to be a beneficiary which could be possibly without them even being named in the deed.

Holding costs for trusts can be nil upwards. There are accounting fees which will depend on what the trust does. A trust holding one property may be $600 or so. Not sure what governance fees are.

The whole section on loans is misleading.
A trust is not a legal entity so the property cannot be in the trust name. The property and loan would be in the name of the trustee. The trustee would generally be the borrower with any individual director of the trustee giving a guarantee to the loan.

I would say probably 95% of lenders lend to trusts.
Some lenders do charge higher rates, but generally the rates will be the same or similar to loans to individuals. Westpac are generally not good for trusts, but St George are great.

Borrowing capacity could be greatly improved with a trust – I have written a thread on that here somewhere. Can’t say I have ever encountered a lender insisting on a 25 year loan for a trust. Some lenders do charge a fee for their solicitors to review the trust deed to make sure the trustee is allowed to borrow and mortgage – fees are about $300 to $400 usually.

Etc etc