Forums / Property Investing / Creative Investing / Investment Structure

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  • Profile photo of andkozandkoz
    Participant
    @andkoz
    Join Date: 2006
    Post Count: 10

    I am considering a structure for a townhouse development project in Queensland. The land is to be purchased in the name of the structure, townhouse built and after completion each investor will have designated townhouses transferred into his/her entity.Prior to the initial purchase of the property  the co-owners would enter into a deed whereby they acknowledge that the land is to be held on bare trust for the benefit of each other in accordance with the proposed plan of subdivision each co-owner will hold their interest in the other co-owners post-partition lot on bare trust for that other co-owner. That is, the land is legally registered in the names of all co-owners as tenants in common in each shares but the each co-owner holds their interest in one post-partition lot absolutely and the balance of that post-partition is held for the benefit on bare trust by the other co-owner(s).

    For example, the deed would give effect to the following ownership structure prior to the acquisition of the property:

    ____________________________________________________________________________________________

    Post-partition                                   Post-partition                                Post-partition

        Lot 1                                                 Lot 2                                                 Lot 3

        Co-owner 1:                                     Co-owner 2:                                     Co-owner 3:

        Legally & beneficially owns 1/3        Legally & beneficially owns 1/3        Legally & beneficially owns 1/3

        1/3 held by co-owner 2                     1/3 held by co-owner 1                    1/3 held by co-owner 1

        1/3 held by co-owner 3                     1/3 held by co-owner 3                    1/3 held by co-owner 2

    ____________________________________________________________________________________________

    After partitioning:

    ____________________________________________________________________________________________

         Lot 1                                                 Lot 2                                                 Lot 3

         Co-owner 1                                     Co-owner 2                                     Co-owner 3

    ____________________________________________________________________________________________

    As I understand the beneficiary for whom the interest(s) are held on bare trust is treated as the owner of the asset and is considered to own the interest from the time the property was acquired.

    As I understand there should not be any tax consequences on the partitioning. This includes no stamp duty in Queensland.

    It should be noted that the Bare Trusts are not as simple as Bare Trusts used for SMSF, where they hold only one property. The Bare Trusts in this case hold 1/3 of a lot for the Co-owner 1, 1/3 for the Co-owner 2 and 1/3 for the Co-owner 3.

    I  am wondering whether anybody has any experience with this structure or can recommend any lawyers or accountants familiar with his structure.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    This is called a deed of partition. It has to be set up like you say with each % ownership in accordance with the final land size for that person. Should be possible to avoid stamp duty on the final transfer (or nominal) and a beneficiary is assessed, generally, as the owner for income tax purposes. Legally each person will own the same percentage too so it will be the same.

    But the hard part will be finance. Each and every wner will have to guarantee or be joint borrowers with all the others. Joint and severally liable etc.

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

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

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    As Terry has mentioned Deed of Partiton would sound like the way forward but finance may not be possible or of possible very restrictive and not ideal for each party in the future.

    If are in Sydney and want some top advice you can't go past Terry.

    If you are in Brisbane then try Darryl who is ay

    PRO Town Planners Brisbane 3399 4969 [email protected]

    Property, Property Development, Investment and Business Law [email protected]

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of RPIRPI
    Participant
    @rpi
    Join Date: 2012
    Post Count: 308

    Hi Richard

    I am sure that I can speak for Terry also when I say thanks for the triple recommendation.

    Are you having the same problems as I do, big fingers, little phone.  

    regards

    D

    RPI | Certus Legal Group / PRO Town Planners
    http://www.certuslegal.com.au
    Email Me | Phone Me

    Property Lawyer & Town Planner

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 11,992

    No Darryl just trying to endorse your services lol.

    Yes darn phone screen is too small or is my eyesight this time of night in the dark.

    Cheers

    Yours in Finance

    Richard Taylor | Mortgage Broker helping investors build their wealth thru property
    http://www.mortgagecapitalaustralia.com.au
    Email Me | Phone Me

    0-40 Properties in a decade with a unencumbered portfolio value in excess of $40M. Ask me for a copy of my API Interview.

    Profile photo of RPIRPI
    Participant
    @rpi
    Join Date: 2012
    Post Count: 308

    I figured as much.

    I think I should add in my signature  "big phone, bigger fingers" .  Even on a phablet they are still bad for typing on.

    RPI | Certus Legal Group / PRO Town Planners
    http://www.certuslegal.com.au
    Email Me | Phone Me

    Property Lawyer & Town Planner

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