Hello,
My wife’s parents leave overseas and they asked us how they could invest in Australia. They’ve got some savings and they are concerned with devaluation of their currency and of US dollars, which play great role in their country (some of the savings are in US dollars).
It will be very much appreciated if someone could suggest the ways to make investment in Australia (perhaps in residential property), specifically how to structure the investment. I will explain my thoughts below.
The parents may have enough savings for the deposit (20%). But the rest should be financed. They cannot (to my opinion) take loan in Australia, so we might need to take a loan on their behalf. Now, I’m not sure how ownership and tax issues should be tackled.
Maybe a Discretionary Unit Trust is the way to go? I.e. we establish the trust and parents put money in it. Then we take a loan and buy units in trust. Trust has now enough money to invest in property. Parents will be the main beneficiaries.
I’m not sure whether the above scenario is correct and weather it will work.
I will really appreciate any ideas and suggestions from the forum.
Thank you very much.
Terryw, Mel
Thank you very much for the replies. I’m glad my idea about the trust seems to be acceptable by other people – this gives me confidence to investigate further and to seek the professional advise in this area.
BTW, Terryw has mentioned JV. I would guess this stands for Joint Venture. What is psecial in that particular arrangment/structure?
Appreciate your help.
Leonid
The trust method described sounds feasible. Just bear in mind that this will affect your loan serviceability for future loans. Are you sure they do not qualify for a loan on their own?
For your parents in law, it may depend on their residential status. ie are they permanent visa holders or citizens? If not, then they may have to get the approval of the Foreign Investment Review Board, which is usally only available for new property.
Maybe you could form some sort of JV with them too. They would supply the deposits and you could get the loans. Somesort of trust structure would be good wiht this too.
BTW, I am not an accountant, so pls check with one.
Terryw
Discover Home Loans
North Sydney
[email protected]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
Leonid, I think that a trust would be the way to go, with you and/or your wife as trustees (or directors of trustee company) so that the borrowings are in your name.
Then if there are profits, distribute them as is decided amongst you all. Although I do think that you and/or your wife should get some distribution if you are taking the risk of the loan etc.
I would speak to an accountant regarding this, and how the best way to approach it is.
Cheers
Mel
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