Hi to all,
I have been advised to start a family trust with a limited company as the trustee with my wife and I as the beneficiaries as we want to aquire properties with a long term ‘buy and hold’strategy.
I have recently found that we will not be able to take advantage of negative gearing which may prove to create an issue with cashflow-especially in the early years of aquiring when we are trying to use as much equity as possible for more purchases.Can anyone advise on the long term advantages of a family trust or should we be going a different way???
Thanks-any comments will be greatly appreciated
KLH
KLH,
How many IP’s do you intend putting in the trust ?
We currently set up a new company and new trust for each property so they aren’t linked in any way. We don’t want one clown in one property affecting or getting access to equity in another property. This whole convaluted process is surely about asset protection and covering your assets from greedy litigation attempts. The more protective layers between your bum and the snarling dogs the better I reckon…as does my accountant and solicitor.
Of course, if you are buying 50K flats with little equity and the like, this approach is pretty pointless. My suggestion would be to use strategies that are appropriate for your current position…big tools for little things aren’t effective.
Cheers,
Dazzling
“No point having a cake if you can’t eat it.”
Speak to your Accountant re a Hybrid Discretionary Trust depending on which state you are purchasing in. With a HDT you will get the benefits of negative gearing as well as asset protection.
Am just a beginner myself but similar position with regards to equity and cashflow. Have set up a HDT and just purchased my first property.
Hope this helps a bit
ShelleyWhat would be the real benefits (besides litigation)of a discretionary trust if there are no tax benefits?
KLH
There are tax benefits with a HDT. The loss can be distributed to a beneficiary (being the highest income earner) rather than being carried forward in a family trust hence taking advantage of negative gearing.
Regards
ShelleyI’d suggest you Do a search on the site and contact Cata or Coastymike for some advice also..
Learn about the pro’s and con’s before you move forward
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorSome good advice Redwing.
E-mail me if you want to talk.
CATA
Asset Protection Specialist
[email protected]Whoa, You guys are all over my head!!! Can someone please please explain what a HBT and family trust and trusts involve and why set them up. What does a trust do? how much does it cost?? WHAT ARE THE BENEFITS??
cheers
JohnJohn
The benefits of owning an IP in a trust are
-Asset Protection
-Tax benefitsThe trust owns the IP or any asset, but lets you have control everything that happens in the trust. This will keep potential litigants away from your assets and give you some good tax planning also, as you can distribute profits to a low income earner.
A HBT or Hybrid/Discretionary Trust is a combination of a unit trust and a discretionary trust. This is one way to use negative gearing while not owing the IP, but the trust owns it.
Hope this helps.CATA
Asset Protection Specialist
[email protected]
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