Hi guys,
I’m looking at setting up a trust but need some professional advice about whether it’s suitable for me. If you know a good taxation lawyer who specialises in this field can you possibly recommend me to one. Cheers
Where are you based ?
Richard Taylor | Australia's leading private lender
I’m based in Maribyrnong.
Come on people. I’m sure someone must know a good taxation lawyer that they’ve been hiding.
Looks like someone asked a month ago – have a look at https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4332979?page=1&highlight=Lawyer%2CMelbourne. Not a lot of help, I know, but should get you started. Does it have to be Melbourne? These days it is pretty easy to work remotely, in which case Rob Balanda on the Gold Coast may be able to point you to an expert. He is a well known lawyer in property investing circles and is an active property investor himself so will have almost certainly come across your situation.
You may find that a good accountant with plenty of property investing experience can provide the advice you need. The info on the post linked to above should point you in the right direction – you may need to do a bit of googling to find the websites and contact details of those mentioned.
What are you hoping the lawyer can tell you?
Try to work out for yourself different scenarios – cash flows for purchasing in a trust and in your own name. Both longer term and short term.
Also make a list of the pros and cons of using a trust or your own name. I've been through this hundreds of times on the forums so you should be able to find a lot of info on this here.
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
Well Terry,
I kind of know the basic in terms of what trust in want, but setting it up I would imagine you would need the assistance of a professional for that wouldn’t you? Terry I just read another post you mentioned that you can’t offset losses against your income in a trust. However one of the books I’ve read outlines a Property Investment Trust that allows you to offset any losses. You thoughts?
Hi Nightelves
Yes you would need someone to set it up and advise you. But it is a bit of a difficult question to answer – "do I need a trust?" Everyone needs a trust, ideally, and no investment should be purchased outside of a trust.
But it is going to cost you, especially in the early stages, and you have to work out if you are willing to wear these extra costs – such as not saving tax, paying more land tax etc.
This is really only something you can answer once you know how trusts work etc.
Hybrid trusts can get around the loss issue, partially, but allowing an individual to borrow to buy the units in the trust. But to do this you will need the property owned by the trustee and the units owned by a different person which means the title is in one name, but the borrowings must be in another. Very few banks will do this sort of loan – lending to 3rd parties. So you will have trouble finding finance – something a lawyer may not realise. Also since your trust will be operating as a unit trust you will have no tax flexibility. Profits and Capital gains must go to the unit holder. The units would also be classed as property under the bankruptcy act and therefore little asset protection.
I would suggest you try to work through as much info as you can prior to seeing the lawyer. Otherwise most of it will go over your head and you may not tell the lawyer enough necessary information – because you don't know what you don't know sort of thing. And do some calculations on different scenarios. If you ask them to do all this it is going to take time and if they charge $500 per hour it is going to cost you a lot of money – with the end result you may decide not to use a trust.
Good luck.
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 Nightelves,
If you want to get educated before seeing a lawyer or talking to an accountant I have found this to be very useful: http://www.trustmagic.com.au/ – $55 for the ebook – so that’s 6 minutes and and 36 seconds of lawyer time! He also has some links to practitioners in this area.
Cheers,
PS – I have recommended this book a couple of times on the forums – I have no association or interest, I just got a lot out of it.
Hi nightelves,
If you PM me I am happy to give you direct names of people we recommend in Melbourne.
It seems that everyone in this forum has given me the right idea. I would have to firstly educate myself and armed with the right questions before going to a taxation lawyer. JJ7 after reading the ebook from trustmagic were you confident about what structure to adopt for your trust.
I think that is my main concern at this stage.
Nightelves,
I only bought it recently and I am now confident about the questions to ask my accountant in a couple of weeks’ time, and also have a good idea of what structures make sense for me. I will re-read 3-4 chapters just before going in to talk to my accountant because some of it is quite technical (eg the different roles involved, essential items to cover in the trust deed), but more than just how to structure it talks a lot about the day-to-day mechanics of operating the structure – eg how to go about borrowing, what minutes you need to write when to support certain expenditures, trust tax returns, tax deductions.
It may or may not make you totally comfortable with what structure to go with but it will give you the language and concepts you need to have a cost effective discussion with an accountant and/or lawyer, and also give you most of the tools you need to do cost/return comparisons against different holding entities. It isn’t specifically about property investing and doesn’t get into land tax issues etc, but does also talk about running other businesses within a trust structure. There are plenty of pictures which show the relationships between the entities and the typical money flow.
HTH
that's disappointing that the ebook does not cover in details about property investment because that's the part I would love to learn more about.
Different skills – you need to understand how trusts work in general first before you can figure out how to apply them to property investment.
A trust investing in property is generally the same as a person investing.
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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