Hi Andrew

I am no expert, but would expect if you did this you would be paying stamp duty on 99% of the value of the property when you switch it over again.

A far better option may be to look at a Hybrid Discretionary Trust to own the property. This will enable you to claim the negative gearing benefits and for your wife to get the capital gains if selling – and the flexibility to change this around and/or distribute to other family members/companies on lower incomes.

Better talk to a good accountant about setting one up.

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Or just keep it, and change the loan to IO, and just wear the extra payments on the new loan for the PPOR. This may end up cheaper than selling the old one.

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Hi CT
Yep, since the unit holder is only borrowing 80%, then LMI won’t (usually) apply.- It may be charged on some low docs loans however.

Banks won’t perceive it as more risky, same rates etc apply.

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Just relooking at your figures, you are pretty highly geared, but just because your properties are cross collateralised doesn’t mean you cannot sell one or two. You will just need to change the security on the remaining loans. But x-coll makes it messy.

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You can depreciate items that are used in producing an income, even items that are owned before the production on income. If he has never heard of a depreciation schedule, then he can’t be very knowledgeable about taxation, so you may be missing out on more deductions. ie his/her ignorance may be costing you money.

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I don’t think there is any problem with one director – this is generally recommended as it limits the guarantees required by lenders. The trustee is just the ‘person’ that runs the trust.

The ASIC could probably be paid by the trust, as the trustee exists to run the trust in this case and would have no income.

Shareholders cannot be held responsible for the company – generally. If they are making decisions, then they could be liable as they may turn out to be defacto directors etc. If personal guarantees are given then they can be held liable for these of course – some banks want guarantees from shareholders too.

I am not an accountant or lawyer, so seek proper advice please.

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I believe ‘corpus’ relates to the capital or principal of the trust. So maybe corpus beneficiary is one who receives the capital of a trust when it is wound up? Just guessing here.

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Depreciation is a cost of holding the asset. The asset is owned by the trust, so it would be the trust that claims any depreciation.

The individual can only claim the interest – because they have purchased income producing units in the trust.

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Hi Dutchie

I agree discretionary trusts are great. But watch out if your properties are making a loss (ie negative geared) as the losses cannot be utilised until the trusts makes a profit. Maybe look into hybrid discretionary trusts if this is the case.

Also trusts are not taxed the same as a business. Trusts no not normally pay tax at all. Trusts distribute all income to a wide variety of beneficiaries who then pay the tax based on their own tax rates. So with careful planning the trust can greatly reduce tax or maybe even eliminate it altogether.

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If your name was added to the loan, the rate would jump to around 10%, this would make a huge difference in repayments. If you want to argue that you are buying a house, your name generally has to appear on title unless you are using a trustee to buy it for you. In which case you will need legal advice.

Maybe you could explain your dilemma to the landlord and ask they let you out of the lease.

Long term, you may be better off with a trust, or your share held in trust – maybe in your daughter’s name. You can then transfer the share at a later date into your own name when the bankruptcy matter disappears = 7 years.

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