All Topics / Legal & Accounting / ATT: Accountants/financial planners, Advice needed on feasibility of trust for purchase of positvely geared property

Viewing 11 posts - 1 through 11 (of 11 total)
  • Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42

    Hi I am looking for advice on the feasibility of opening up a trust to purchase an investment property. This property is off the plan in chinchilla park through vantage holdings. It will be positively geared (I am looking at 200-300 in my back pocket after my loan is paid). So I am wondering since I will be paying tax at 46.5% if i purchase through myself is it better to do this through a trust which would be 30% to my understanding? Also questioning its worth since I would be borrowing 95% so also curious how being guarantor for the trust would affect my lending? The project will cost me no more than $400k and I was recently approved for $608k so borrowing power is not a problem.

    Any accountants/financial planners opinions would be highly appreciated thank you.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    You forgot to mention lawyers – A trust is nothing but a bunch of legal obligations.

    Seems like you are only considering income tax. What about land tax, asset protection, estate planning, succession issues etc.

    Trusts generally do not pay tax, but the money flows through to one or more beneficiaries who then pay tax on this income. You could use a company as a beneficiary to cap the tax at 30%. But there are many other things to consider, some financial, some legal, and some strategies.

    I would be surprised that something off the plan will put so much money into your pocket on 100% borrowings or even 95%.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42
    Terryw wrote:
    You forgot to mention lawyers – A trust is nothing but a bunch of legal obligations.

    .

    Yeah rookie error there, thats why we ask questions haha. I have a conveyancer, can they advise me on a trust? I am also interested in the legal side, in case the unthinkable happens ie) getting sued, she devil partner taking my hard earned assets. That sort of thing. Im just very new to it so want to find out the best way to go about it all before diving in head first. 

    Yeah the area im looking at (chinchilla) is offering high rents due to limited properties on the market. This may not last forever. I live in muswellbrook and have seen a sharp decline in rents which has made me sell my land and look elsewhere. But the projects that are to be undertaken in this area are large. I have read that 42,000 workers will be needed across 40 projects in about 8 different sectors. In a town that only has 5-6 thousand locals already I think it makes for a worthwhile investment.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213

    Only lawyers can give legal advice.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Richard TaylorRichard Taylor
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    @qlds007
    Join Date: 2003
    Post Count: 12,024

    On a separate issue are you sure you can get a 95% lvr in Chinchilla?

    Done a few deals up there and must admit off the top of my head didn't think the MI would go past 90%.

    Certainly if it is Gemworth they wont be doing in interest only these days.

    Course always happy to be proved wrong by 95% in a Trust structure call me old fashioned or what but not from where i am sitting.

    Cheers

    Yours in Finance

    Richard Taylor | Australia's leading private lender

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    Just looked it up in a map.

    Man, be careful.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of qlddkqlddk
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    @qlddk
    Join Date: 2013
    Post Count: 7

    Emerald rentals just fell on its face…

    I would be very careful about buying in Chinchilla and I work out here right now.

    42000 workers? maybe, but no all at once, and most in FIFO like me

    then afterwards, maybe a few thousand workers fulltime, some/most might live here

    I am interested in the whole trust setup advise thou

    cheers

    Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42
    Qlds007 wrote:
    On a separate issue are you sure you can get a 95% lvr in Chinchilla?

    My friend works for the company I'm going with I'm being told Commonwealth will offer LVR of 95%-90%, I will most likely contribute 7.5%-10%

    Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42
    qlddk wrote:
    Emerald rentals just fell on its face…

    I would be very careful about buying in Chinchilla and I work out here right now.

    42000 workers? maybe, but no all at once, and most in FIFO like me

    then afterwards, maybe a few thousand workers fulltime, some/most might live here

    I am interested in the whole trust setup advise thou

    cheers

    Your opinion is valued to me since you are working there. I understand there are certain risks involved but it seems like it is worth the risk. 42,000 workers wont come all at once i agree, but they will still come and still need accomodation. Where do you live when you fly in? 

    Profile photo of Matt39Matt39
    Member
    @matt39
    Join Date: 2012
    Post Count: 42
    Qlds007 wrote:
    On a separate issue are you sure you can get a 95% lvr in Chinchilla?

    Done a few deals up there and must admit off the top of my head didn't think the MI would go past 90%.

    Certainly if it is Gemworth they wont be doing in interest only these days.

    Course always happy to be proved wrong by 95% in a Trust structure call me old fashioned or what but not from where i am sitting.

    Cheers

    Yours in Finance

    Im interested to know more about your deals in Chinchilla and how they are performing/risks involved? Some feedback I am getting is all for it and some think Im better off invested elsewhere?

    Profile photo of JohnTeferJohnTefer
    Member
    @johntefer
    Join Date: 2013
    Post Count: 1

    You should to seek the advice of a professional lawyer and accountant before proceeding with the establishment of any trusts and related property purchases.There are three main factors to take into consideration when evaluating the most appropriate ownership structure,these are Estate planning,Asset protection and trust also..Hence we take prior concern on these major aspects..

    Accountant in Walsall

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