All Topics / Legal & Accounting / Buying a house in a Family Trust and renting back

Viewing 5 posts - 21 through 25 (of 25 total)
  • Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    hi Hong

    It is possible to lease out your home and avoid CGT in certain circumstances. You will need to live in it before leasing it out, and must be less than 6 years etc. It is the temporary absence from main residence rule, s118-145 ITAA

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://structuring.com.au/
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    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of itsandrewitsandrew
    Participant
    @itsandrew
    Join Date: 2007
    Post Count: 294

    hi Terryw,

    I have been reading about the 6 year thing with CGT but as I am new to this stuff I don't fully understand how it works.  Does it mean you can rent out a property for 6 years and not pay CGT if you have lived in it previously?  Does this mean you can have an alternative PPOR during this time?

    Andrew

    itsandrew

    Go as far as you can see and you will see further.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    itsandrew wrote:
    hi Terryw,

    I have been reading about the 6 year thing with CGT but as I am new to this stuff I don't fully understand how it works.  Does it mean you can rent out a property for 6 years and not pay CGT if you have lived in it previously?  Does this mean you can have an alternative PPOR during this time?

    Andrew

    Yes – but you can only claim one main residence at any one time.

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

    Profile photo of DanRob1DanRob1
    Participant
    @djr5678gmail-com
    Join Date: 2015
    Post Count: 1

    Hi All, Just reading through this thread and thanks for all the contributions. I know it is quite dated now, however…are the relevant rules still the same as my summary below:

    1. Possible to own home in family trust and live in it (i would be director of trustee company with wife and we would both be benefeciaries)
    2. We pay rent to family trust
    3. Family trust pays tax on rent but as it would be a new home there would be some deductions and so it would likely equalise any tax or result in a loss
    4. We would loan money to this family trust which would then pay us the interest
    5. Family trust would likely require additional capital each year as loan amount would be equal to property value so rent would not cover outgoings like rates, water, maintenance etc.
    6. But, if i also hold other income producing assets in the trust like shares or bank accounts, these would assist in meeting any shortfall in cash required for trust to pay interest to me and meet outgoings thus providing income shortfall to meet that i have preducted in point 5.
    7. Trust would probably still incur a paper income loss because of div 40 adn div 43 deductions etc this would help especially if residual income left.

    In a nutshell, forgetting about loss of asset protection on the loan i make to the trust, is this still a goer?

    cheers all

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    3. No, trusts will only pay tax if the income is not distributed. If there is a loss it will be carried forward

    It is still possible – but many things to consider – structure of the trust, structure of trustee, land tax, type of loan to the trust etc etc

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

    Lawyer, Mortgage Broker and Tax Advisor (Aust wide) http://propertytaxbook.com.au/

Viewing 5 posts - 21 through 25 (of 25 total)

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