Hi all,
I have bought my first IP and have been talking to an accountant re setting up a hybrid discretionary trust before settlement.The money I have borrowed is in my name (and that of my wife).
I want to set up the HDT with me owning the units of the trust (to get the negative gearing benefit). Is this possible even though the money has been borrowed by both me and my wife?
Best Regards Andrew
I think it may be too late. If you have exchanged contracts and the trust does not exist, then you may have a problem – better check with a solicitor.
If ok, you may need to get the loan to be redone. The title to the property will be in the name of the Trustee, but the loan needs to be in the name of the unit holder. The bank will also require a copy of the trust deed so they can have it reveiwed too. The loan shouldn’t be too much of a problem to change, but they may want to charge you a reword fee if documents have to be prepared again.
Who will the trustee be and who is your lender?
Terryw
Discover Home Loans
Parramatta
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Agree with Terry, Its most likely to late..the O&A would’ve been done in your name so you could potentialy pay Stamp Duty twice if you now put into the Trust..speak to your accountant
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating Calculatorsoops..just re-read your post, maybe you need to speak to an accountant well versed in HDT’s?
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsHi Andrew
Terry is on the money IMOP.
Structuring should be done prior to purchasing. This makes things easier. It may be better to keep this IP as is and structurefor your nextone.CATA
Asset Protection Specialist
[email protected]No problem Andrew, just draw up an agreement with your wife to lend her 50% of the loan from her, so that way you practically have the complete loan. Your wife has an interest expense to the bank but and equal amount of interest income from you. The ATO have accepted that a husband and wife may enter into a joint loan agreement even though only one party has the investment income.
Originally posted by trajik:No problem Andrew, just draw up an agreement with your wife to lend her 50% of the loan from her, so that way you practically have the complete loan. Your wife has an interest expense to the bank but and equal amount of interest income from you. The ATO have accepted that a husband and wife may enter into a joint loan agreement even though only one party has the investment income.
trajik
Just to clarify, you would be only referring to tax savings in claiming interest here? This would not help with Capital Gains Tax, asset protection or estate planning issues would it? (I am not an accountant). Thanks
Terryw
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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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Terry,
the fact that the loan is in two names doesn’t impact on the CGT, Asset protection, or Estate planning as the property is still owned by the trust,
Tajik,
Sorry, I misunderstood the post. I agree its the ownership that’s important for these issues.
Terryw
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
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I dont undestand how what you’ve said gets the property into the HDT Trajic??
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating Calculatorsredwing,
I’m assuming that the contract is in the trust name, otherwise, yes it is too late unless the contract can be changed before settlement.
The loan situation is a seperate issue to ownership of the property.
My understanding was that the IP is already purchased or at least contract signed.
CATA
Asset Protection Specialist
[email protected]as a lawyer we often change the name of the purchaser even after contract is signed.
you need to novate the contract (i.e terminate the original and then sign a new one). can be done with agreement of seller
avanti lawyersjavascript:insertsmilie(‘[suave2]’)
Cool [suave2]as a lawyer we often change the name of the purchaser even after contract is signed.
you need to novate the contract (i.e terminate the original and then sign a new one). can be done with agreement of seller
avanti lawyers
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