I would think he would be eligible as he has never owned property. Was he ever on title?

The fact that a past spouse had owned property shouldn’t matter.

Terryw
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You possibly could, but you will end up having to pay CGT on 2/3 of the house. Maybe a better way is to move in, claim the grant, and then move out completely and rent it. Use the 6 yr rule for CGT exemption.

Terryw
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You might be able to just reassign your option to the end person, or do a simultaneous settlement.

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Be careful about making written offers, or you could be locked into a binding contract if they accept. you wouldn’t want 10 accepting at the same time or you’d be in trouble. Talk to a lawyer about condition clauses.

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Hi baldy

These are referring to two different types of trusts. Hybrid and discretionary. Hybrids are best used when the property is running at a loss, as the individual can offset the loss against their personal incomes.

If you are going to be buying cashflow positive, then you will not usually have a lossso will not have to worry about this so much. But there are other advantages to having a hybrid trust. Also there are various expenses you can claim such as non cash expenses including borrowing costs, depreciation of building and fittings, and this may actually result in a cashflow +ve property with a tax loss. If you have a loss within the trust, then it cannot be offset against personal income. It can be rolled forward and offset against future income in the trust though.

The number of lenders lending to individuals with the property owned by a company as in the case of a hybrid is restricted. So this will restrict overall borrowings too.

So, in summary, who should borrow the money would depend on what sort of trust you have.

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I believe any sort of business requires an ABN, including trusts. With shares its similar to property, you just open an account in the name of the trustee and the trustee buys and sells shares.

There are some extra tax rules with dividends and discretionary trusts. After a certain amount, the trust may need to make a family trust election. Once it has done this, the trust can only distribute to direct family members. Since this restricts things a fair bit, it might even be a wise move to start a different trust for your shares, depending on how many you intend to hold.

Best to check this with your accountant as these rules are complex and have recently changed.

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I have no fixed loans myself. I like the flexibility of being able to change banks easily if need be without potentially high exit fees.

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You will need to set up a written loan agreement between the person lending the money and the trustees of the trust. Probably best to transfer it to the trust bank account first.
Most trust deeds allow a company set up later to be a beneficiary, so you may be able to save some fees by waiting a bit to set it up until you need it.
The company will have a profit which it then pays tax on and distributes the left over to the shareholders – who may then have to pay more tax.

The company could also retain profits and these could be used for further investments by lending the money to the trust. But check everything with your accountant as there are strict rules in this area.

Terryw
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You can be qualified in as little as 8 days. eg see the courses at http://www.ps146.com.au/

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There are not many books out there on this stuff, but a few accountant websites have a list of the differences.

Trusts are generally best for property investment due to the access to the 50% CGT discount which companies don’t get, and the tax advantages as well as the asset protection advantages.

Companies are good for business as they limit liability. They are not good for owning appreciating assets such as property, usually, as companies are taxed at a flat 30%.

A business name is nothing really. Just a name, not an entity.

If you want to set up a trust or a company you had best speak to a good accountant – one that knows about property and structures. Not many do.

Terryw
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