Can you buy and sell shares actively (every few months) in a trust?
Can you start a trust in anticipation of holding investments (ie. buying an IP) in it? Of do you have to buy the IP first and then start up a trust to put it in?
What if I live in NSW but I buy an IP in another state?
Do I buy the IP in my individual name? or the trustee’s name?
Thanks.
ToniToni Cooper
Can you buy and sell shares actively (every few months) in a trust?
Can you start a trust in anticipation of holding investments (ie. buying an IP) in it? Of do you have to buy the IP first and then start up a trust to put it in?
What if I live in NSW but I buy an IP in another state?
Do I buy the IP in my individual name? or the trustee’s name?
Thanks.
TerroniToni Cooper
Hi Toni
Yes, can buy shares in a trust. Though there are special rules with regards to dividends (family tax elective).
If you are buying a property, the trust must be set up first. Otherwise you will have to pay stamp duty again when transferring it to the trust.
The title goes in the name of the trustee – which may be an individual or a company.
Can buy in different states using a trust.
Terryw
Discover Home Loans
Parramatta
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Thanks Terryw
Is it correct that if I am a trustee I can’t be a beneficiary?
Hence I would probably then set up a company as trustee. And then I can be a beneficiary?So I can have a trust set up in NSW and buy QLD property via that trust?
Thanks again.
Toni Cooper
Setting a non trading company as trustee is far better for asset protection and something I would do.
A trust can purchase property in any state but will need to be stamped in that state. If trust is in NSW and purchasing in Qld then no stamping is required as trusts do not need stamping in Qld.
CATA
Asset Protection Specialist
[email protected]A trustee can be a beneficiary.
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by Terryw:If before going bankrupt they sold their house to someone (including a trust) within a certain time frame, this sale can be reversed. This time frame was 6 months but recently the law changed on this – think now 5 years.
5 years before the commencement of the bankruptcy unless the transferee proves that the bankrupt was not insolvent at the time of the transaction. Otherwise 2 years.
CATA
Asset Protection Specialist
[email protected]Terry and Cata
You guys are awesome. Very forthcoming with info, even though there may be no financial reward.
May good karma come your way ten fold…or at least someone send you a case of beerThanks stuck-at-two but I don’t drink beer.
How about a bottle of red?
Not everything is about the money.[thumbsupanim]CATA
Asset Protection Specialist
[email protected]Just curious,
Regarding paying of additional stamp duty to transfer IPs into a trust, if the IP is in the US, where there is no stamp duty payable on purchase, how does this work? [eh]
Is it just a straight forward transfer into the trust?cheers
LaurenceThis would need someone who knows about US laws as well. I am not familliar with these laws but here are my opinions.
I will assume you are an Aussie resident investing in US property in your personal name.
Setting a structure in place in Aus. and transfering the IP into the trust may incur CGT, as you will need to sell the IP to the trust(payable at your next tax return).
You will need to weigh the costs now to sell the IP to the trust against the costs involved if/when you sell the IP in the future, keeping in mind the possibility of litigation in your personal situation.
Hope this helps
CATA
Asset Protection Specialist
[email protected]Hello Trust Gurus
Yes, I know that I need to seek professional advise but since some of you are more clued up than most professionals, I thought I’d go to the source. [biggrin]
I have a family DT and a company which is trustee (I’m a director of this company ). If I wanted to set up another DT to hold other IP’s would it be nescessary/safer to set up a second company to act as trustee to this new DT?
There is a new land tax law in Victoria which I believes says that any property bought after 31 Dec 2005 and “owned” by a DT is subject to a surcharge. My question is, doesn’t this make it less attractive to use a DT? Should I be looking at another sort of trust.
Thank you
ElkaI use the same corporate trustee if purchasing another IP. If in business I would set up another corporate trustee.
Save your money and use the same trustee.
I have not heard of the surcharge but if it is on a discretionary trust then any other trust you would use for property investing would have a surcharge also IMOP.CATA
Asset Protection Specialist
[email protected]Thank you for your answer Cata.
I assume you don’t own property in Victoria Cata because if you did you’d know about the new law. It’s savage. [grrr]
For a DT, you get a one time chance to nominate one of the beneficiaries as being responsible to pay the land tax for property held by the trust. This is then aggregated to any property this person holds privately (except PPOR). Any property bought after 31 Dec 2005 does not get this chance and pays the surcharge. Not nice at all. [glum2]
This is not so for fixed or unit trusts if the SRO has been notified of the unit holders. It then just “looks through” the trust .
Actually I think I will start a new topic about land tax minimisation. I assume it’s legal.
Cheers
ElkaHello
I have been reading about Trusts – discretionary and unit.I am still trying to clarify in my own mind why it would be beneficial to by my IPs in a trust.
My plan is to buy 1-3 IPs over the next 5 years (don’t know how many at this point). And to hold onto those IPs and sell for retirement and transfer proceeds into super fund and then get a retirement income stream (allocated pension or such).
I understand with a discretionary trust I can nominate the beneficiary to recieve the income – but is this the only benefit? (My IP will be neutral and then positive CF).
What is the benefit with capital gains? beside the 50% discount which will be relevant whatever way I do it.
Many thanks
Toni
Hi Elkam
I would not use a unit trust to purchase property. The simple answer is because if I had $1 mll in property inside a unit trust, and there are two units from the trust, What is each unit worth?
$500 000. It’s far to easy to determin who owns what in this type of structure and it give little asset protection. Unit trusts were just deemed a special trust. This means the land tax loophope is now closed from a unit trust.Needless to say, a unit trust has it’s place but not for personal property investing IMOP.
Hi Toni
Do you have enough in your superfund to purchase an IP?
This will reduce your CGT when you sell and save the trouble of transfering the profits into the superfund later. The downside is that a superfund can not borrow money.A discretionary trust can distribute all income including CGT. Keep in mind that if the money is distributed from the trust before June 30 the tax is payed at the beneficiaries marginal tax rate.
You will get the 50% CGT discount and then be able to distrubute the rest to the lowest income earners. Using this stratagie there should be no more than 30% tax on the taxable portion of the profits(maximum).If you can understand this then you will understand the extra benifits using a discretionary trust.
There is also Asset Protection and Estate Planning benifits of a trust that must be taken into consideration.
CATA
Asset Protection Specialist
[email protected]Many thanks for your guidance and time CATA. I’m still trying to get my head around it but slowly, slowly getting there!
Toni[exhappy]
Thanks Cata. When you put it like that it seems obvious. [blush2]
So DT’s are the only way to go ?… except for the hefty land tax surcharge in Vict? Any other options available?
Elka
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