Trust Structure and Depreciation

Viewing 8 posts - 1 through 8 (of 8 total)

Roofarmer
Member
@roofarmer
Join Date: 2003
Post Count: 63
February 12, 2003 - 7:31 am
Just wondering if you can claim depreciation write-offs under a trust structure i.e. pass the benefits on to the beneficiaries.
“Most people operate under a false ceiling which is 3 feet high” Stuart G Goldsmith
Steve McKnight
Keymaster
@stevemcknight
Join Date: 2001
Post Count: 1,763
February 13, 2003 - 1:41 am
Hi,
Yes. Here’s how it works…
Turst Income: $40,000
Trust Expenses: $20,000
Depreciation: $10,000
Nett Trust Income: $10,000
This nett trust income is then distributed to the beneficiaries.
Cheers,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com
Success comes from doing things differently
Roofarmer
Member
@roofarmer
Join Date: 2003
Post Count: 63
February 13, 2003 - 3:17 am
Hi Steve,
So is what you are saying that the actual income you receive is $20,000 ($40,000 – $20,000) but you only pay tax on $10,000 due to the $10,000 depreciation?
Cheers
“Most people operate under a false ceiling which is 3 feet high” Stuart G Goldsmith
Steve McKnight
Keymaster
@stevemcknight
Join Date: 2001
Post Count: 1,763
February 13, 2003 - 3:27 am
Hi,
I’m saying the actual cashflow you receive is $20,000, but the amount of income that needs to be distributed to beneficiaries is only $10,000.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com
Success comes from doing things differently
Roofarmer
Member
@roofarmer
Join Date: 2003
Post Count: 63
February 13, 2003 - 4:22 am
So you can retain the extra $10,000 for future property deals since depreciation is only an on-paper loss?
“Most people operate under a false ceiling which is 3 feet high” Stuart G Goldsmith
Steve McKnight
Keymaster
@stevemcknight
Join Date: 2001
Post Count: 1,763
February 13, 2003 - 5:09 am
Ah,
Not quite… to see my thoughts on depreciation please visit:
https://www.propertyinvesting.com/depreciation
Bye,
Steve McKnight
**********
Remember that success comes from doing things differently.
**********
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com
Success comes from doing things differently
Roofarmer
Member
@roofarmer
Join Date: 2003
Post Count: 63
February 14, 2003 - 2:54 am
Sorry Steve,
I understand the ins and outs of depreciation fairly throughly but don’t quite know how you receive the benefit under a trust structure. Getting back to your example:
Turst Income: $40,000
Trust Expenses: $20,000
Depreciation: $10,000
Nett Trust Income: $10,000
Where does the $10,000 depreciation income go? Does it stay in the trust or does it actually end up in the beneficiarie’s bank account?
Sorry to sound stupid [:0)]
“Most people operate under a false ceiling which is 3 feet high” Stuart G Goldsmith
Steve McKnight
Keymaster
@stevemcknight
Join Date: 2001
Post Count: 1,763
February 14, 2003 - 3:34 am
Hi,
I don’t think you sound at all stupid.
The depreciation expense doesn’t ‘go’ anywhere.
It just reduces the amount of trust income that needs to be distributed to the beneficaries.
In the example, without the depreciation, the amount that would be distributed is $20,000. After depreciation, the amount falls to $10,000.
If this still doesn’t make sense then I suggest you talk it over with your accountant.
Bye
Steve McKnight
**********
Remember that success comes from doing things differently.
**********
Steve McKnight | PropertyInvesting.com Pty Ltd | CEO
https://www.propertyinvesting.com
Success comes from doing things differently