Hi
My friend heard that it is possible to purchase a proeprty in the trusts name but the loan for the property is in our personal names. I would appreciate your advice if lending institutions will offer these loans? which institutions do that?
I think that the purpose of this is so that the individual can negative gear for the property but yet the property will be held in the trust.
thanks for your help.
Cheers
A trust does not exist as a legal person so it cannot buy property. A trust is just a relationship between the trustee and the beneficiaries. What happens is a trustee buys a property to be held on trust for the benefits of the beneficiaries.
Now to answer your question, if a trustee buys property and the individual gets the loan then from a tax point of view the trust will claim the interest and not the person.What you may be referring to is where a trustee of a unit trust purchases the property and the unit holder borrows to buy income producing units. Depending on a few things this allows the individual to claim the loss in their personal tax return. ie it indirectly allows negative gearing in a trust.
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
Thanks for your advice, Terry. So it is possible to do this. however the several financial institutions that I phoned all say that it is not possible to have the loans in our individual names and the property in the name of the trustee. do you know of any financial institutions that offer loans for this situations?
thanks
Yes, many of the majors do. But you probably won’t be able to find out by ringing up as you would be lucky to speak to someone that knows what a trust is. Best to speak to a broker.
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
In most cases, buying an investment property in a trust over complicates things and isn't worth the time, effort and costs to buy in this set-up.
Always best to consult your accountant that can advise you as to how you should purchase your next investment property.
This is a unit trust arrangement that I think most people should stay clear of.
There are some benefits, but for most people it's overkill.
It was also promoted under a "hybrid discretionary trust" structure and a "Property Investors Trust".
Australians have a obsession with negative gearing i sware.
Anything for a bit of tax back. Btw theres extra setup costs involved in that structure
TPI wrote:This is a unit trust arrangement that I think most people should stay clear of.There are some benefits, but for most people it's overkill.
It was also promoted under a "hybrid discretionary trust" structure and a "Property Investors Trust".
I think everyone should beware of statements such as this. It is not correct to say most people should stay clear, perhaps better to say this is something that may not suit most people but there is nothing wrong with this strategy. It is one of many strategies and may be considered.
It is not the same as a hybrid discretionary trust. completely different.
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
Terryw wrote:TPI wrote:This is a unit trust arrangement that I think most people should stay clear of.There are some benefits, but for most people it's overkill.
It was also promoted under a "hybrid discretionary trust" structure and a "Property Investors Trust".
I think everyone should beware of statements such as this. It is not correct to say most people should stay clear, perhaps better to say this is something that may not suit most people but there is nothing wrong with this strategy. It is one of many strategies and may be considered. It is not the same as a hybrid discretionary trust. completely different.
Ok fair enough, it would not suit most people
.
. You must be logged in to reply to this topic. If you don't have an account, you can register here.
