All Topics / Legal & Accounting / Buying when using a HDT

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  • Profile photo of Property WAProperty WA
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    @property-wa
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    June 28, 2006 - 5:29 am

    Hi all,

    I read a post recently by Mulder but I just wanted some clarification as I’m sure this would effect alot of forumites..

    If I have a HDT (‘Smith Investment Trust’) and it has a company (‘XYZ Pty Ltd’) as trustee, on the offer documents for the property im looking at purchasing , can I write …

    – XYZ Pty Ltd as trustee for the Smith Investment Trust-

    Secondly, what happens (in terms of names and titles) on the loan doc’s?

    Thanks again.

    Profile photo of catacata
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    @cata
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    June 28, 2006 - 6:56 am

    The name at the titles office will be XYZ Pty Ltd as they need to relate the title to somebody.

    CATA
    Asset Protection Specialist
    [email protected]

    Profile photo of Property WAProperty WA
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    June 28, 2006 - 7:01 am

    Thanks Cata,

    But does that mean that income and/or losses will be trapped in the company as opposed to being passed to the HDT for distribution?

    Profile photo of catacata
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    June 28, 2006 - 7:04 am

    Keep a minute entry that says the IP was purchased “As trustee for the smith investment trust”

    Bank account should also be “as trustee for”
    Trading done inside the trust.

    CATA
    Asset Protection Specialist
    [email protected]

    Profile photo of Property WAProperty WA
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    June 28, 2006 - 7:08 am

    Thanks Cata,

    Thats what I thought, the loan doc’s work the same way?

    Profile photo of catacata
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    @cata
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    June 28, 2006 - 7:11 am

    I would refer you to a good broker for the loan docs (insert Terryw here) .

    CATA
    Asset Protection Specialist
    [email protected]

    Profile photo of TerrywTerryw
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    June 28, 2006 - 7:17 am

    The owner would be the company, so XYZ Pty Ltd as trustee for the Smith Investment Trust (check with your solicitor)

    But the loan should be in the unit holder’s name, not the company. Who this is would depend on your situation, but would probably be the higher tax payer in your family.

    Terryw
    Discover Home Loans
    Parramatta
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    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of TerrywTerryw
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    June 28, 2006 - 7:23 am
    Originally posted by Property WA:

    Thanks Cata,

    But does that mean that income and/or losses will be trapped in the company as opposed to being passed to the HDT for distribution?

    Don’t forget, losses cannot be distributed from a trust. Only income can.

    (Hybrids enable the borrowings to be done through an individual who claims the interest.)

    Terryw
    Discover Home Loans
    Parramatta
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    Sign up to my mailing list.
    Just send me a blank email, with “subscribe” in subject line.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of Property WAProperty WA
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    June 28, 2006 - 7:24 am

    Thanks TerryW,

    Much appreciated.

    Profile photo of redwingredwing
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    June 29, 2006 - 11:57 am

    PropertyWA

    Its worth Purchasing Dale Gatherumgoss’s book Trust Magic if looking at HDT’s

    “Money is a currency, like electricity and it requires momentum to make it Effective”

    Online Positive Cashflow and Renovating Calculators

    Profile photo of Property WAProperty WA
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    @property-wa
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    June 30, 2006 - 7:30 am

    Thats the second or third time Ive heard that book mentioned. Ive been meaning to have a look and might just try track it down this weekend.

    Thanks Redwing

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