I beleive that a resettlement only occurs when the trust is changed in some way. Changing a trustee won't actually change the trust in anyway – beneficial owners of the trust assets will still be the same. If you start adding or substracting beneificaries or classes of beneficiaries, then the ATO will probably deem a new trust to come into existance and treat all assets of the old trust as being sold to the new trust = CGT and Stamp duty problems.

A few years back the ATO put out a Statement of Principles in relation to trust settlements – which is just their interpretation of the law.  Here is a quote from

Creation of a new trust – Statement of Principles August 2001

:

"5.4. CHANGES OF TRUSTEE

A change of trustee does not in itself result in a termination of the trust. If there is merely a change of trustee, the trust property with the accompanying equitable duties are assumed by the new trustee and the trust estate continues unchanged. On the other hand, a change in the trustee or control of the trustee may be an element in arrangements which in their entirety amount to the creation of a new trust."

http://www.ato.gov.au/print.asp?doc=/content/14283.htm

So, Ect., I think your friend needs a new accountant!

Any loan on a property is irrelevant for CGT purposes.

Rob, this is an Australia focused site. What country are you from?

Duckster,

That ain't necessarily so. A bank can take both, either or neither of your properties if cross collateralised. The point is, you have given them security so they decide. If you keep your loans separate, then you can decide which one you need to sell.

And also bear in mind if a bank gets a court judgment against you, they can then easily apply for a court order to sell any of your assets even other property that they don't have a mortgage over.

I think in Vic it is not the case either. The SRO can take the value of the whole purchase (ie all the units) and assess the stamp duty on that – which would be much higher.

Having a company complicates things from a taxation point of view. If a company lends one of its assoicates money there are a whole host of rules which if they aren't applied property will mean the ATO could deem the loan to be a dividend payment and tax you on it!

Be very wary of Hybrid Trusts at the moment, or any trust that claims to allow negative gearing. I fear some will fair the ATO scrutiny.

Hi Louie

Don't forget the CGT issues.

At least if you live in the property initially for a short time you can claim it as your main residence and possible be able to claim CGT exemption even if you rent it out. Plus you can get the FHOG grant and stamp duty exemptions.

Check out some managed funds. Some have returned 60%+ pa over the past 12 months.

Having IO means lower repayments. The extra you could have paid can now go into an offset account on your home loan. This will save you non-deductible interest. If you pay down an investment loan, you are reducing your tax deductions. It would be silly to do this while you still have a home loan which you cannot claim.