Hi All,
Currently I'm in the process of looking for a IP to be purchased under a Family Trust. This is my first time purchasing under a family trust. So I had a few questions and hoping you guys could help me with.
Now I spoke to the bank and they advised that purchasing under a family trust will cost me more than opposed to my own name. I will need to clarify with him what the extra cost are. Interest rate? set up fees?
I was wondering if I would still be able to finance under my name and purchase the property under a family trust?
If this is possible, what problems will I have with tax claims?Thanks guys for taking the time to read and respond to my post. Any advise would greatly help! Great forum!
Jason
Hi Jason
Yes you are right many lenders rub their hands with glee as soon as you mention you are buying in Trust as it means they can charge either a higher interest rate, increased application or a combination of both.
In saying this there are also just as many lenders who dont treat such entities as a money making venture and understand the structures required by investors.
In fact i can think of a couple of lenders that actually will give a rate discount based on the quality of the application and not based on the entity.
Happy to provide further adviice if you need it.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hope you are not trying to set everything up on your own.
Read this recent interesting case
Aston (Aust) Properties Pty Ltd & Ors v Commissioner of State Revenue (Taxation) [ 2012] VCAT 48 (9 January 2012)
http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VCAT/2012/48.html?stem=0&synonyms=0&query=title%28%222012%20VCAT%2048%22%2911 Trustee companies and 67 trusts owning real property – but he stuffed up and the trusts were not valid.
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
jasedc5r wrote:I was wondering if I would still be able to finance under my name and purchase the property under a family trust?
If this is possible, what problems will I have with tax claims?Remember the trust is not a legal entity. It will be the trustee that is owning the property not the trust. So it should be the trustee borrowing the money in their capacity as trustee.
If you borrow in your name an you are not the trustee then it could be deemed that you are onlending the money to the trust. If you did that then the interest on that loan would not be deductible.
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
Can someone please explain the difference between having a company setup to be the trustee of a trust as opposed to having myself as the trustee of a trust which will be used for purpose of subdivision and land development.
Thanks
AALLII wrote:Can someone please explain the difference between having a company setup to be the trustee of a trust as opposed to having myself as the trustee of a trust which will be used for purpose of subdivision and land development. ThanksAllii
Huge difference.
Companies have the benefit of limited liability so will help protect you and your assets if something goes wrong. Althoug you will still be required to give perosnal guarantees for loans etc.
Using a company clearly distinguishes the trust assets from your own personal assets.
It is easier to hand over control with a company to someone else. eg. you become incapacitated and the trustee needs to be changed – if a company you just change directorships with title being the same with an individual you will have to change the title of the land.
This is also easier for estate planning at death too. Make sure you plan control of the trust being passed on as trust assets are outside your will.
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
Thanks Terryw, sounds good much more clearer now.
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