Hi All,
The answer to this question may be somewhere on the forum, but I thought I would start a new thread.
I have recently set up a trust & company structure for purchasing property. I have an IP in my own name and another IP in the name of the trust.
I have been renting for 12 months and I am now looknig to purchase a PPOR.
What are the benefits/ramifications of purchasing my PPOR in the trsut?
From my understanding, I would lose the CGT free aspect of my PPOR but is there anything else that I need to know???
Thanks,
RJB
If you purchase the PPOR in a trust, you lose the CGT main residence exemption. That's the main one.
Depending on what state you are in, there may be land tax payable. In some states, trusts don't receive the same thresholds that individual owners do, and PPOR's are generally exempt from land tax (in individual names)
You should also read your trust deed and see if there is anything in it to prevent a beneficiary living or utlilising trust assets. You may have to pay market rent for example.
Also consider losses – may be trapped in the trust if the trust has no other income.
On the plus side, you may be able to claim more things depending on how it is structured.
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
Why would you want to place your PPR in a trust? the CGT concession loss is a biggy!I have read the ATO is very wary of people renting their PPR to themselves through trusts – they see it as a sham and disallow the investment deductions.
Get accounting advice
Charles 1 wrote:Hi Why would you want to place your PPR in a trust? the CGT concession loss is a biggy! I have read the ATO is very wary of people renting their PPR to themselves through trusts – they see it as a sham and disallow the investment deductions. Get accounting adviceHi Charles1,
I appreciate your reply. Main reason is that I plan to live in the property, renovate it and then move on and have no interntion of seeling the property once I move out. Therefore I would prefer to have it in the Trust once it becomes and IP.
I didn't know that there was an issue with the ATO about renting from your own Trust. I was under the impression that a Trust is a seperate entity and therefore shouldn't really make a difference. Perhaps I'm incorrect…
RJB
The ATO is concerned with anything that may save someone tax. It is still possible to do though.
see this private ruling for example:
PBR 83291
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/83291.htmand
PBR Authorisation Number: 1011415913206
http://www.ato.gov.au/rba/content.asp?doc=/RBA/Content/1011415913206.htmSee also this old TR concerning a unit trust – which they have concerns about.
TR 2002/18
http://law.ato.gov.au/atolaw/view.htm?docid=TXR/TR200218/NAT/ATO/00001Terryw | 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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