We purchased a property afew years ago with R50 zoning in a Discretionary Family Trust structure. We are about to built 2 townhouses on it and leave the existing house?
Do the new houses have to be put in the name of the same trust?
Is there a better structure that they can be built under?
Thanks in anticipation.
Anita
I believe that with a sub-division the titles must stay in the same names as the original title or there will be stamp duty payable.
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
Hi Anita,
Terry is right.
An important thing to think about is dependent on whether you intend to sell the properties or hold for investment. There are different implications in regards to GST, CGT and income tax if you are a developer who sells or an investor who holds. Different structures are required to maximise the various taxation outcomes, particularly if you intend holding.
I'm not qualified to give specific advice on how to achieve that, particularly on a public forum, but after 27 years of development I have sorted out the answers. For the answers you need to take advice from an accountant or solicitor who has experience in property development and investment and the formation of tax effective structures.
Bob Andersen
Positive Property Strategies
http://www.propertystrategies.netThanks Bob and Terry
I know that a Dicretionary Family Trust is not the best structure for property, but my accountant set it up as I thought I would be purchasing Positive cashflow properties – until I realised they were nigh on impossible!!!
However the property we purchased cost $172,000 18 months ago and is rented for $340pw and the 2 houses we are building will cost $210,000 each completed and we anticipate getting $320-$350pw each for them.
Total purchases $592,000 and total rent $980pw ($50,960pa). This almost makes it CF+ so perhaps the structure it is in is not so bad. We do intend to keep the properties and may sell of the existing one in the future though. Do you still think there is a better way?
Kind Regards
AnitaDiscretionary Trusts are good for many reasons. One draw back is that they cannot distribute losses. But in your situation there may be only a small loss for a few years. After that the benefits will really start to pay off – especially if you sell.
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
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