Hello to all. I am new to this web site and still getting my feet. I am looking at starting a real estae investment portfolio and wanted to know if anyone had personal experience with family trusts and if they are a good idea.
Thanks in advance,
KevinHi Kevin
Difficult to provide a defined answer as everyones circumstances are different. Trust come in vary guises each having a particular place in the market
If you are looking for Asset protection and also want to be able to claim the negaitve gearing benefits then a HDT is worth considering.
However before you start you probably need to make sure all the fundimentals are in place with regards to your loan structure.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Richard,
I too am looking into the structure question – I thought it was the first thing that I had to get sorted. What exactly do you mean by loan structure? could you possible supply an example?
regards
KarenHi Karen
Assume you have your own PPOR which has $200K of equity in it.
You are wanting to purchase an IP for $200K and you go back to your Bank to borrow the entire amount plus sufficient funds to cover acquisition costs.Normally your Bank would make an advance for the full amount in the one loan and cross collateralise the 2 securities.
This would carry on with each new IP property you decided to buy.
Several down the track the Bank tell you according to our records you cannot borrow any more money although by now your PPOR is worth $600K and your loan has been repaid.
Regretfully as all of the loans are cross collaratilised you cannot take your PPOR elsewhere as it is being held as security for your IP’s. Uncrossing them now gets both messy and expensive and will depend on the Banks view of each of the individual securities as to whether they will do it in the first place.
A little bit of loan structuring from day 1 would have set you up in a manner where non of the loans are X collaratalised and yyou can keep on going with your wealth creation.
If you wish to sell any of these IP’s all you are required to do is repay the loan outstanding on the particular security. Especially important if you may have triggered a CGT liability and may require cash of of the sale to cover this.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Yes, a discretionary trust is an excellent vehicle to own property. Most business people have one. Look at a few posts under the Legal & Accounting forums.
One disadvantage is that trusts cannot distribute losses, a way around this is the HDT which Richard mentioned.
Terryw
Discover Home Loans
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Send an email to get my newsletter.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
Thank you all for your information, I will look into it more and get back to you with the results.
Thanks again
Kevin.
Thank you Richard,
that’s very helpful – I had understood that never cross -collateralising was a golden rule, but never fully imagined what the implications could be. What an unfair outcome for the banks to saddle someone with! How arrogant they can be.
regards
Karen
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