As a self confessed Negative Gearing advocate, I have swallowed every last word on negative gearing over recent times – believing it to be the saviour from paying high Tax. Tonight’s story, and subsequent readings in this site, have made me question it.
Accordingly, previously, I would have advocated the purchase of such investment properties by the highest tax earner. Under positive cash flow, is this the case, or better done by a lower income earner ?
Depending on your personal circumstances, it may be advisable to purchase in a Trust. This all depends on how many properties you are going to hold, as the overhead of establishing and maintaining the trust is relatively high.
The trust will allow you to distribute income to beneficiaries as you see fit, ie to the lowest income earner to save tax, and also offers a measure of asset protection.
Regards,
Kristoffer Sheather.Hi profit
welcome to the forum
I agree with Kristoffer a trust is certainly worth looking into. Look at previous posts about structures and Trusts. If you plan to buy Cash positive buy through the trust, but if you continue to buy negative then you are right to buy in the highest income earner.
The Key is to buy cash positive properties that will appreciate in value
westanIf purchasing negetively geared properties, a trust is still very beneficial, so not just for positive cashflow properties – can still get the tax benefit if set up right!!!
Cheers
AlanaW
Can you please expand on your knowledge of setting up the trust in the most beneficial way?
Regards
FreedomAlanaW
the problem with a negative Geared property in a trust is that losses in a trust cannot be transfered to an individual taxpayer (so they can claim it against other income). The only time a nergative geared property is worth being in a trust is if a capital gain is made and you sell.
At least this is my understanding of trusts (i’ve had one for 7 years) if i’m wrong please explain where? Thanks
westanWestan
Losses can aparently be diverted to the unit holder in hybrid trust which effectively means losses can be distributed from a trust.
I’ve only got a discretionary trust so haven’t actually tried this.
Terryw
[email protected]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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