Hi Basilakis

They must transfer the land at market rates – or at least pay stamp duty and pay CGT at market rates. Transfer = sale.

Having a trust would allow the least amount of tax to be paid by allowing the distribution to relatives on lower tax rates, but you would have to pay stamp duty to do so. So weigh up the costs and see if you will save enough tax to justify the move.
 
Once the property is transferred your parents will no longer be the owners and won't be able to claim any expenses from that point, but they may be able to claim expenses up to the sale.

Another thing to consider is if you leave it as is and you fund the construction – how will you pay for this? can you pay cash as if you are not on title you will not be able to borrow using this property. Your parents may have to borrow and you fund the repayments etc.

Hi Wayne

Banks will still look at your employment and income (unless No/Low Doc).

If you have an unencumbered property, what you could do is to get a No Doc loan to the value of 70% and then use this as deposits for the next ones.

eg. $500,000 x 70% = $350,000

Using $350,000 as 30% deposits on further properties would enable you to buy more than $1mil in additional property.

All theoretically possible without declaring an income.

it maybe possible, but unlikely I think.

 what could be possible is to clone the trust  – ie make a second trust exactly the same. The new trust can hold the one property and the old trust the remaining property. You can then take control of the new trust and control the property.

often the sunset clause is worded like "contracted must be completed within 14 days of registration of titles" etc. Is there anything like this in the contract?

I purchased the product about 10 years ago. You will need to get your statements out and type every transaction into the computer. I must admit I did a few months worth, didn't find anything and then forgot about doing the rest. I then changed computers and couldn't reinstall it as you needed to send away for a new password each time and I lost the fax number on where to send it to.

Its not hard to get finance if you are able to show tax returns and are making a profit – many do not and need to try for Low Doc or No Doc loans (20 to 30% deposit generally needed). Most banks want you to be self employed for 2 years with some accepting one year. For No Docs you only (generally) need 1 day self employment history.

1, I don't know about agistment, but you can claim the interest on vacant land if you had the intention to build on the land and rent out.

2. You can only claim a place as your main residence once you have lived in it first. So if it is rented out first, you won't be able to claim the PPOR exemption during this period.

3. You can only claim one house as your main residence. it is up to you on which you claim – probably the one with the most growth. You can chose which one to class as the main residence in the year in which you sell one of them.

4. What about moving into the unit straight away and then move out back home and rent it out, negative gear it and retain the CGT free status.

5. I am not an accountant so seek proper advice.

Hi Alex

I am starting to think the same thing. why bother with property – there are so many taxes such as stamp duty, land tax etc and so much hassle with constant repairs. And I also agree that things can not continue as they have been as property and rents will become too much for people to afford. Where I live it costs about $600 pw  to rent a 2 bedroom place, that is a full wage to many people.

But, there are still plenty of cheaper more affordable areas, even in Sydney – still possible to buy a 3 bedroom house for around $200,000. I think these areas may experience some growth in years to come as demand hots up due to people being priced out of the other areas. But then again, there are the hassles and costs of property ownership.

And don't forget with putting money in the bank you will have to pay a lot of tax on the interest too.

Maybe shares are the way to go.

I am not sure of the differences either, but have that ridiculously expensive book "trust structures guide" which outlines the various types of trusts and their differences.

It says "The fixed unit trust differs from an ordinary unit trust in that the provisions dealing with the issue of futher units and the redemption of units by the trustee provide that each of these must occur at a price determined on the basis of the net asset value of the trust fund according to Australian Accounting Principles.The power of amendment of the deed is also restricted so that the provisions regarding the calculation of the price for the issue or redemption of  units cannot be altered."

Under unit trusts it says they are "not appropriate where revenue losses are involved (a fixed unit trust should be used instead."

What this means is, I think, that is there is a loss in a unit trust (like negative gearing on a property), then the loss may not be able to be claimed by  a unit holder in a unit trust, but could be in a fixed unit trust.

A unit holder may be able to borrow to buy units in a trust and then claim the interest on the loan against their personal income if the units are income producing. But if the units can be redeemed by the trustee of the of trust at non-market values, then there is no commercial benefit in borrowing to buy units and therefore the ATO can disallow the claim.

eg. say you buy a $100,000 property with 100 units, each valued initially at $1000. Each unit holder claims a loss from negative gearing for a few years. Then the property jumps to $200,000 but Mr X wants out and the trustee redeems (buys back) the units at  $120. There is only a capital gain of $20 per unit, but the assets of the trust have increased by 100% and the unit holder has claimed a loss from negative gearing for all of these  years.

This is why many of the old hybrid trust deeds will fail.

Bluestone have also pulled the pin!