I have been anlaysing the options for various purchasing structures and beleive there are signifcant advanatges for a Hybrid Trust.
Say you had one property (no other income)that was $2,000 dollars CF+ve before depreciation. After deprecaition it goes -$3,000 (paper loss). If you were using a straight discretionary trust then the $2 k would be in the bank and the – 3k loss would be carried forward and could be offset against future profits.
But in the hybrid situation you could offset the loss against your income and pay less tax (save money without spending it). In time when the property goes +ve after depreciation then you could convert to a discretionary and do all the good things that that allows you to do.
This being the case why woulddn’t you always use a Hybrid Trust ? any feedback appreciated.
Bardon
I think it is better than that. You borrow money to buy the income producing units in a unit trust, so all interest is claimable against your personal income. As the trust is not paying any interest, it makes a large profit which can then be distributed at the trustees discretion. I am not sure if there is any requirement to distribute all or just some or none to the unit holder (aferall, if they were not making money from the units, they may not be able to claim the interest).
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
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