Hi All
I have just received letter from my account about my tax refund for last financial year.This was the firs time I would be reciving refund since I built my first investment prop.To my shock I am told because Trust is a Discretionary trust that interest is claimed within the trust so there are no negative gearing benefits to me as individual and there is now $ 14.000.00 losses within the trust and for this reson it is unlikelythat trust will make any profit distribuations in 2006 and there is no need for me to have 15-15 variations.
If I can not get any negative gearing,no 15-15 variations and trust holding such a big amounts of money and my tax returns were as much as the other guy ( which was not much) I will go broke by next year .I do understant I do get growth and all the other benefits in the long run but without some basic cash flow I wont get there.Please help.
Fredom 3
Sounds like you do not have the right structure. I am guessing that the property is -ve gear. If you purchase a +ve gear inside the same trust you can offset the -ve.
Or, Maybe consider something else that can produce income to offset the -ve.
Do a search for “Oxygen Funding” who claims that she can get 3% per mth. This could be an option to offset a -ve.
The correct structure can make all the difference, but these might be options for you. If not, when you sell you can use the tax credits to offset CGT.
Hope this helps
CATA
Asset Protection Specialist
[email protected]Would Fredom be able to do a ‘paper refinance’ (as in by shares in the trust – as in with a HDT) to make the loan an investment loan and therefore be tax deductible for him/herself?
The trust could then still use the tax credit for next year or when ever it makes a profit.Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonFrom my “To early Sunday morning thaughts”
The trust that Freedom3 has is a discretionary trust, and hence the problem of not getting the -ve out of the trust. Not a Hybrid Discretionary Trust. There is no units in a discretionary trust to buy.
Other than offsetting the -ve with something, there would be restructuring into a HDT but this would be an expensive plan.
I guess there is always the option of getting out of the deal(selling) but that will depend on the position Freedom is in.
CATA
Asset Protection Specialist
[email protected]Hi Cata&C@34
Thank you for your help.I haveCouple of questions for you guys.How much will it cost me to transfer from one trust to another and if I do sell what happens to the $14.000 I have in the trust account ( as a loss).
FREEDOM
Hi F3,
I think you might actually loose it, if you do what you suggest – I seem to remember something about the Trust Resettles and, as such starts with a new slate. I’m not 100%, so seek further advice before you do this!Cheers
C@34Our greatest weakness lies in giving up. The most certain way to succeed is to always try something one more time.
– Thomas EdisonThe loss can be deducted of the capital gain to reduce CGT( if there is a gain) otherwise it is lost.
Costs to transfer would possbbly include selling the property to another trust so something like this
CGT (if any)
Stamp Duty (possibly)
set up of new trust
maybe some other legalsIn other words, alot of money. This would be a last resort for me.
CATA
Asset Protection Specialist
[email protected]If you sold to a new hybrid trust, you could keep the old trust and the loss and keep carrying it forward. Future income from other investments may then be able to be distributed to the old trust to offset the loss.
With a trust, i am not sure if the Capital gain (if any) can be offset from the loss as these are different income streams.Better check this with your accountant (maybe a new one?)
Terryw
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Parramatta
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Was it a discretionary trust that you wanted set up, by your post it doesn’t look like it, the question I have would be who set it up (wrongly) for you and put you in this pickle…your regular accountant?
REDWING
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