A person I know mentioned that he is going to buy a house as his PPOR and neg gear at the same time. I thought that this was only possible if it was purchased as an IP. He said that this was possible because he has a family trust. Is this correct?
maybe. Yes, you can rent from your familiy trust, and it can claim deduction.
A trust can only negatively gear if it has other income. If there is no other income then the loss cannot be distributed and must just sit there waiting to be offset against future income.
If the person is using a hybrid trust, then they can borrow to buy units in the trust and then offset the interest against their own personal income. But the ATO has put out a ruling which frowns on using a unit trust to hold a home that the trustee is living in. see TR 2002-18 – Income tax home loan unit trust arrangement. I don’t know how they would treat this arangement if it was done thru a hybrid trust.
Terryw
Discover Home Loans
North Sydney
[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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