Hi all,
I am currently considering changing my PPOR into a IP that is valued @ $550K with $160K owing & with a return of $600p/w. I was considering conducting the following things to the property & if there is any other options that may suit my current needs please fell to comment;
-Changing the ownership from my wife's & mine into our family trust?
-Who is the correct authority (from a ATO view) to value our property to it's current value to minimise our CGT if or when we sell the property?
-If I change into our family trust, what value to have to pay stamp duty (Is it when we bought the property or its current value)?
-With depreciation, does get the house get depreciated from its construction price or its current value?Regards
LeftyIf you sell to a trust there is little (or even no) asset protection so seek advice.
CGT is payable at market rates so you will need a registered valuation for CGT and Stamp duty purposes
– consider the land tax issues and the fact that trusts cannot offset losses
– new loans will need to be arranged.
– depreciation is on construction cost i think.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
Yes depc'n is at construction costs. How old is the property?
Hi Terry,
Why is there little (or no) asset protection in the trust? I thought that was one of their key benefits.
Andrew
itsandrew
Go as far as you can see and you will see further.
Andrew
Trusts provide the greatest asset protection – discretionary trusts that is. But it is not simply a matter of transfering property into them. You need to proceed carefully.
Just 2 examples of why there could be little asset protection in this situation.
If you transfer property undervalue it can be voided under the bankruptcy Act, s120,
If the transfer was done with the aim of defeating creditors (ie asset protection!) the transfer can be voided too. s121Terryw | 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
Last Chance,
The property is 8 years old.
Terry,
Thanks for your feed back. Could you please explain a little more on the land tax?
Do you think it is a good move to change my PPOR to a IP as the main goal is to turn it into a positive cash flow property & placing it into a trust is to minimise tax?
Your thoughts would be great.
Lefty.
in NSW discretionary trusts don't get the tax free threshold on land tax. Usually a person's home is exempt and then they can own up to about $380,000 in other land before land tax kicks in. Then it is 1.6% of the value of the land pa. Discretionary trusts may not get this and have to pay the tax on all land owned.
Imagine you had one property worth $350,000 (land component only). A trust may have to pay $5,600 per year (every year too) in land tax whereas an individual nil
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
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