The trustee is the owner of the property. So this is the name that is on title. When you sign a contract, you can sign TIA ATF (as trustee for) XXX Trust, but it is only the legal name of the trustee that is recorded on title.

Terryw
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Why? Do you think you will be getting a bargin?

There doesn’t seem to be any way to find this out other than to ask the agents. Sometimes they use this as a selling point trying to attract people who think they maybe getting a property undervalue, but it doesn’t really work like this.

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I think it is fairly comon to move in early and rent the place – maybe under a license to occupy.

Valuers can only value as is. It the property has another potential use or redevelopment potential, then unless you have DA or plans and are applying for finance for the development, then it is not likely they will take this into account.

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Running costs of a trust are not expensive. Most accountants charge a fee for the return, which is not much. Your trust may have a lot of properties but, you would be paying your accountant to do the tax for these anyway if they are in your own name. So the only extra is the trust return.

Having a company as trustee will cost a bit extra per year too.

The trouble with buying a few in your own names is the extra tax you will be paying. Just think if you buy in your name to ‘save tax’ on a negative geared property and your then sell the property and have a $100,000 capital gain. Your wife is not working and your cousin has a capital loss from a business – you may end up paying $25,000 tax which you could have avoided!

Trusts may mean you have to pay extra land tax as ttman has discovered.

And I agree with Ttman that some accountants just set these up with no explanation on how to use them, and probably are just trying to sell another product.

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Was it the high court? I know the Federal Court determined that interests in a discretionary trust could constitute property. The case is Australian Securities and Investment Commission (ASIC) in the matter of Richstar Enterprises Pty Ltd.

The court was concerned with Carey controlling the trustee and its distributions. ie the role of Appointor.

I don’t know if this went to the high court and think this was just an order for him to supply a list of his assets including any assets held by trusts etc which he controlled.

Even if the courts determined the role of appointor could be seized by creditors a way around this is for the person at risk to not be appointor. eg appoint your spouse. This may be risky if your spouse gets sued, but having one of you as the safe person will reduce this risk.

The role of beneficiary is different. There is no guarantee of income, just a possiblilty. So if the individual went bankrupt, then the trustee would simply stop distributing income to them – as the bankruptcy trustee would probably get their hands on it.

Trust deeds can also be worded such that in the event of an appointor getting into trouble, then they are automatically to be removed from this role and another appointed.

Terryw
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I think it works because the individual owns units in the trust and the trust is able to borrow to buy these units back. The trust can thus claim a deduction for the interest on this borrowing.

There is some dispute between accountants on whether the trust needs to buy the units back at market value or if it could buy them back at the same price the unit holder paid. If the property has grown, then you would think the value of the units has grown in proportion. If so, the unit holder may then have to pay CGT. But how do you value units in a private trust?

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You just need to approach it like a new purchase. Just speak to a solicitor who can arrange the legal paperwork, transfers etc. And also speak to your mortgage broker about if you could qualify for finance on your own.

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If your bank is one that starts with “N”, then they seem to have a policy of trying to make every customer’s loan cross col with other loans. A former manager there told me this is policy, it helps the bank keep clients by making it hard for them to leave.

You can still have loans with the one bank and not have them crossed. You just have to emphasis this at the time of application and check the mortgage documents carefully. And allow time to have everything redone if they stuff it up the first time.

Terryw
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Yes, you could have 2 loans, and an offset against one of these. Most lenders only allow one offset account.

Terryw
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