All Topics / Finance / Trust Tax benefits

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  • Profile photo of snivagsnivag
    Member
    @snivag
    Join Date: 2010
    Post Count: 6
    March 13, 2010 - 10:44 pm

    Hi, this is my first post here so can someone help me, I have decided when I buy my first investment property I will buy it ‘in trust’, how does this affect my personal tax if the property is negatively geared. Do I personally still get the tax breaks, or is it the trust that gets the benefits? Hope this question makes sense.

    Thanks

    Snivag

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    March 14, 2010 - 3:23 am

    Hi Snivag

    Firstly welcome to the forum and I hope you enjoy your time with us.

    Depending on what type of Trust will determine who receives any potential Tax benefit.

    Most poeple use a Discretionary Family Trust and this is one of the downsides that the losses are closeted within the Trust and cannot be claimed personally.

    Richard Taylor | Australia's leading private lender

    Profile photo of blackhotelblackhotel
    Participant
    @blackhotel
    Join Date: 2010
    Post Count: 140
    March 14, 2010 - 7:46 am

    and depending which state you buy in pay your land tax bill every damn year with no threshold allowance —- damn I hate paying this bill!

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024
    March 14, 2010 - 8:00 am

    But in saying this there are still a lot of important pluses to DFT's.

    Richard Taylor | Australia's leading private lender

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    March 15, 2010 - 8:01 am

    For tax purposes a trust is a separate entity. So it will not affect your personal tax at all, unless you receive income from the trust.

    Any losses in the trust will be trapped there and cannot be used to reduce your personal income.

    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 BankerBanker
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    @banker
    Join Date: 2010
    Post Count: 371
    March 15, 2010 - 9:39 am

    Technically a trust is not a legal entity – it is a structure. The income needs to be transferred (distributed) to a legal entity which then pays tax at it’s own tax rate. The losses stay in trust however can be carried forward and deducted from futures profits.

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    March 15, 2010 - 9:55 am

    Thats correct, but for tax purposes it is treated as a separate entity. Trusts are required to submit tax returns etc.

    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 blackhotelblackhotel
    Participant
    @blackhotel
    Join Date: 2010
    Post Count: 140
    March 15, 2010 - 10:33 am

    Yep – YEARLY Land Tax bills and higher accounting fees. Just gotta love the invention of Trusts!

    Profile photo of PaddyomallPaddyomall
    Member
    @paddyomall
    Join Date: 2010
    Post Count: 16
    March 15, 2010 - 12:31 pm

    Better than losing your PPOR because some tradie fell off you PI roof…

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