Hi,
All as a very new investor whos newly constructed home will be ready for rent in Townsville at the start of May.
I am seeking to find out if I could set up a say a Family Trust in my name. Sell my own home in Adelaide to the Trust arrange bank finance for this then use the $200,000 to purchase a number of sound positive geared investment properties. I then rent back from the Family Trust my own home in Adelaide at the going rent. ????
I just need to know if this could work and how to do it properly to be of benifit.
As this could give me a lot of buying power.regards
Andrew
17/04/04Hi Andrew
It would work (as in do-able), but you would end up paying tax on your rent, CGT if you ever sell your ‘home’ and stamp duty on the sale. If you were only going to live there for another few years and buy a new house, then it may work out better. Have you done any sums?I don’t think any accountants would recommend this unless you were at risk of being sued – even then you could buy 99% in spouses name and 1% in your own name.
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
Andrew,
I ask this very same question to my accountant about 3 months ago. She has other clients who are currently doing just that, but she said that there are new tax laws to guard against this. So she advised us against it.
I guess you still can do it but is it worth the risk is the question we asked ourselves and one that you have to ask yourself.
Talk to your accountant and if they don’t know about it then find another accountant.Gav
“Happy Days”
Hi Super Fund
Your plan must be doable as I remember reading a post from Aceyducey that says he does the same thing.
What you cannot do is have the house owned by a UNIT trust, and claim negative gearing benefits.
To me it sounds like quite a reasonable plan – although if all you want is the borrowings, then you could ‘loan’ your property as security to the Trust to borrow it’s money, which achieves the same purpose.
Cheers
MelYou can do it.
Make sure there is a clear separation – ie best to use a company as the Trustee not you personally.
Also you must pay market rent.
We like the approach because we can claim another property as our PPOR and deduct elements of the rental due to running businesses from home.
The Trust largely furnishes our house, so most of our furniture fits under the depreciation guidelines.
However it’s not appropriate in all circumstances – consult with a GOOD accountant!
Cheers,
Aceyducey
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