I’ve been reading these forums for ages and learnt a heap.
I have a problem with something specific and I’ve searched for something similar in all the posts and haven’t quite been able to find the same thing.I’m trying to find out if it’s possible to do the following:
Buy the family home off my pensioner mother while minimising costs. I would then pay my mother an amount of money for the rest of her life in return for me not paying for buying the house from her.
I would be giving her a guaranteed income and as a trustee of the trust have the house. It would only be my mother and I in the trust.
She would like the home to be placed into a discretionary or family trust so that I can’t lose it through something unforseen happening.
I am able to buy the house from my mother but I can’t see the sense in spending all that money on stamp duty given I will receive the house in her will after she dies anyway.
I know this is complicated but I’ve already spoken to my accountant who I thought would have something to contribute but basically said he wasn’t able to offer any suggestions.
Any help or suggestions about either whom to talk to or ideas would be greatly appreciated.
Not an accountant so take what I have to say with a grain of salt (or two)
As I understand it all transactions need to be at market or arms length to comply with the various sections of the tax act. If they are not then it is possible the ATO may consider the transaction a form of tax avoidance.
A trust is not permitted to purchase a property previously owned by one of the trustees. Chris Batten refers to this as being ‘poisoned property’ http://www.chrisbatten.com.au/web/main/poison_property.htm – might be worth a read.
I assume at the heart of your dilemma is an asset rich – cash poor elderly parent. Have you considered a reverse mortgage? This may solve some/all of your mothers problems.
Derek
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http://www.pis.theinvestorsclub.com.au
0409 882 958Derek
I think you are mixing up superannuation trusts and discretionary trusts. Discretionary trusts can purchase property held by a beneficiary. A few of my clients have actually sold their property to their trust.
Terryw
Discover Home Loans
Parramatta
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Dekra
You will need to get good advice on this one. What you mother is proposing may not be the best way.
Things to consider:
– This may effect her pension
– Do you have a PPOR? If not, then it may be better to get the ppty into your personal name to save CGT.
– Maybe a testamentory trust could be set up for the inheritance
– Maybe a reverse mortgage could be considered (to give your mum some extra money now)
etcTerryw
Discover Home Loans
Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by dekra:[/u
I am able to buy the house from my mother but I can’t see the sense in spending all that money on stamp duty given I will receive the house in her will after she dies anyway.Stamp duty now or death duties after she dies?
Possibly much the same costs. there is a number of options that you could consider. instead of writing a short story here, e-mail me if you want to talk.CATA
Asset Protection Specialist
[email protected]Originally posted by Terryw:Derek
I think you are mixing up superannuation trusts and discretionary trusts. Discretionary trusts can purchase property held by a beneficiary. A few of my clients have actually sold their property to their trust.
Hi Terry,
Make that grain a bloody big boulder.[biggrin]
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958wow dekra
your creativity has been working overtime…….
i’m not surprised your accountant was confused or bemused….a little knowledge is a dangerous thing……….
your ideas will take you from bliss, to the dispair
from tax free…to taxable.
you will become an ATO’s auditors dreambut what would i know.
well, i’ve just spent 30k and 2 years cleaning the last mess up
but that doesn’t makes me an expertgood luck
hb
Hi derek
I suggest you get in touch with Chan and Naylor in sydney 89235930 these guys teach accts how to set up correct structures and remember good advice aint cheap,but cheap advice can be bloody expensive,also why buy it if she is leaving it to you? if she needs cash almost any bank will give her non repayable funds to a certain percentage of the property but get advice if her pension is her security blanket,and above all she is mum,make sure whats best for her comes first, i,m sure you will regards Sydneysmart[suave]gjedwards
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