PTN,

You trust is a business, so you can only claim a deduction for business related activity. If you travel relates to the business, then it could be claimable.

Dale Gatherum Goss says you can claim small items and one off gifts that you could not otherwise claim.

You can rent a house form your trust and the trust claim the interest etc, but if you are running at a loss you will need a HDT or other income in the trust to make it worthwhile. ATO will also be looking closely as this, but there are ways around it.

A trust can only distribute profits, not losses.

A trust could buy a car, but you may be betetr off buying it in your own name??

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Just apply for a loan increase with your existing lender. Maybe go to 80% LVR as a LOC and have a separate loan to the first. That way you can use the funds for the deposit on the next property and borrow the remainder as another loan. Interest could also be paid from the LOC.

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Very interesting Dr X.

Funny about agents calling. A friend of mine sold his unit privately, he put an ad in the paper and specified “no agents”. For the next week he was called by no one but agents trying to get a listing.

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Hi CT

My understanding is that the loan needs to be in the unit holder’s name – which is not necessarily trustee. However, I have seen a few client come to me with it all setup incorrectly, they have the hybrid setup, but have the loan in the trustee’s name, so won’t have any tax advantages.

From what I have seen, if the property in creases in value, the trust has equity. The trust can then borrow more money for further investments. If the individual unit holder wanted to borrow more money, they would probably have to buy more units.

I am not sure of all the finer details of HDT as I am not an accountant and do not use one.

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You may save these fees by selling yourself, but an agent may be able to sell it for a higher price and quicker. This needs to be considered as well.

I have found sales commissions to be around 2.5% of sale price. Some charge extra for advertising, others include it in the fee.

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Hi Jennifer

Sounds like an excellent plan.

The original owner will have a mortgage on the property, but you will be paying out this mortgage, so it should not be a problem. Just think of it like you have loans with Bank A and Bank B, if the price has increased you just refinance the lot with bank C and pay out bank A and bank B.

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Sounds like your in Vic. I beleive vendors are legally require to prepare a statement consisting of various things about the property – building approvals, plans, rates, various utility connections etc.

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Hi Ownahome

I agree that companies are separate legal entities. But cannot see how a campany can increase borrowing capacity. Virtually all lenders will require personal guarrantees from directors. This limits things. I am not 100% certain, but presume that on low docs the maximum exposure levels will include existing loans that the directors have as well as the companies. ie you do not each get a maximium exposure level.

True, but if you were using a trust in this instance, you would have the additional flexibility of distributing income to other benefificaries on lower tax rates – who would get the 50% CGT reduction. As a last resort you could distribute to a company to cap the tax rate.

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Thats not necessarily true. If you add or remove beneificiaries to a trust, this could cause a resettlement to occur. This is when the ATO deems a new trust to be formed and all the existing trust assets transfered (ie sold) from the old to the new. This means stamp duty and possibly CGT on everything the trust owns.

What John probably means is the trust deed is worded in such a way that you can just stop distributing to one person whithout having to actually remove them from the trust.

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Do you intend buying more? If so a trust is probably worth considering now.

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