If the valuation indicated there is structural damage, many lenders will not lend or may require a engineer's report on the stability of the building.

Depending on what sort of work the higher income earner is doing, he/she may be able to structure all or part of the work as a contractor and divert money into the trust that way. Careful planning is needed though as there are various rules to meet before this is allowed. Investment income is no problem but the shares/properties would need to be sold to the trust and there could be CGT and stamp duty implications. It may be a good time to sell shares as most have dropped considerably

You will need to have a good read of the contract the vendor has entered into with the broker and your contract with the broker. There is probably a clause in there which states that any person introduced by the broker, no matter when or how long ago, will mean commission is payable.

A trust is where someone holds something for someone else. The easiest way to understand the concept is to think of a parent opening a kids bank account. The parent is the legal owner, but the beneficial owner is the kid – the parent (the trustee) just operates the account for the real owner (the kid as beneficiary).

There is a way to divert profits into a trust for existing properties and that is for the trust to rent them from you at a lower rent, in exchange for various commercial reasons, and then the trust can sublease the properties at a higher rate. You have to be careful to do everything at a commercially realistic rate though.

Hi Again MC

I think you can do what you describe, but are ok as long as everything is done at market rents. A trustee has a fiduciary duty to the other beneficiaries of the trust so you cannot rip them off by charging yourself a lower rent and the ATO would be concerned about this too. But if everything is above board at market rates it should be ok.

You can get the 6 year exemption from CGT, but am not so sure about the land tax as this comes under the Office of State Revenue who have different rules (Never though about this before).

Renting from the trust will run into problems if the trust has no other income as it will likely have a loss. The loss cannot be offset against your personal income.

$300 per hour is pretty standard rates for an accounting firm, but usually they have a set price to set up a trust which includes some advice and the deed and the ABNs and TFNs. it could end up costing you are lot more paying by the hour.

you should definitely set up before signing contracts or stamp duty will apply when you change over.

It is very easy to set up a company and trust yourself, but maybe easy to stuff things up too so it may be wise to get some advice. e.g. putting a spouse as settlor of the trust would mean they could never be a beneficiary. One of my clients put his son as settlor, so even when the dad dies, the son cannot benefit from the trust!.

Companies can be set up for free by filling in the forms as ASIC and paying the fee – $400. If an accountant does it for you it will cost about $500 plus the ASIC fee.

Trusts can be purchased for as little as $178+ on the internet, but an accountant may charge you $1000. Stamp duty may be payable, but QLD is one state with no stamp duty so you are lucky there.

Hi

I am not  exactly sure what you are saying, but basically you can borrow up to 80% of the value of the security without incurring LMI.

so if your property was valued at $600,000, then max loan without LMI would be $480,000.

Maybe the figures given by the bank are a bit out as they have calculated the 95% loan and then added the LMI on top of this figure.

You would just borrow the money from your LOC and lend to your company. You make an income from the interest, but the interest you are charged would offset this and the company is left with the deduction. You couldn't claim a deduction if you were gifting the money to the company nor if you were lending at a lower rate than you were being charged.

I agree with Richard that a company is not a good way to own property unless in its capacity as trustee.