I live in Queensland and I would like to buy a house, and rent it to myself
I would buy in my company family trust
Is this legal
HarrieI think it is fine but there are a few considerations:
-The rent you pay must be at market value or you won’t be able to claim 100% deductions.-Losses are not able to be distributed from a trust, ie. if you negatively gear the property the losses will be tied up in the trust until runs at a profit.
-I think you are still eligible for the 50% CGT discount on the sale if you hold the property for more than 12 months in a Trust but not in a company.
These are a couple of points to run by your accountant.
Rhys
thank you Rhys
HarrieOriginally posted by rhysadams:I think it is fine but there are a few considerations:
-The rent you pay must be at market value or you won’t be able to claim 100% deductions.
You need to run your trust as a business..the ‘main’ benefits are asset protection and estate planning IMHO-Losses are not able to be distributed from a trust, ie. if you negatively gear the property the losses will be tied up in the trust until runs at a profit.
Unless its a Hybrid Discretionary Trust-I think you are still eligible for the 50% CGT discount on the sale if you hold the property for more than 12 months in a Trust but not in a company.
I believe so to, Cata and Coasty Mike mayu be able to help out here as its certainely not my field..These are a couple of points to run by your accountant.
Or one conversant with Trust structures in depth..Rhys
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorRedwing,
Could you let me know about running a Hybrid Discretionary Trust and distributing losses?
Thanks
Rhysrhysadams..
I’m a newbie to this field and it’s a complex one, there are certainely people more qualified than me and i’d suggest talking to them if you are interested..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorOriginally posted by rhysadams:Could you let me know about running a Hybrid Discretionary Trust and distributing losses?
I’m no accountant, but from my understanding it’s not possible to distribute losses from any sort of trust.
What you can do with a hybrid trust though is borrow money external to the trust and use it to buy income units. That typically means that the trust would not incur a loss, since it wouldn’t have the interest expense, and thus could distribute a profit to the unit holder, who would then offset the loan interest against that profit.
I think this is only really useful if the trust holds negatively-geared investments.
GP
I believe GP is right re; the- Gearing benefits rather than distributing losses per se..
From what I know..
HDT’s are a combination of a Discretionary Trust and a Unit Trust that allow the individual to – Gear. The benefits here are Asset Protection, Estate planning, – gearing strategy and flexible distributions of income and CG. The HDT can later convert to a normal DT.
I recommend getting a copy of Chris BATTENS
‘Investment Structures 2002’ Report and reading Dale Gatherum-Goss’s books and I can also recommend Ed BURTONS book for a read as well for the pros and cons of different Trust structures
Harrie– I not sure if you can do it through a family trust structure? Cata or Coasty Mike should be able to elaborate..REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorThanks for that, I’ll have a look into it. I guess its issues like this that justify the amount accountants etc. can charge.
Rhys
PS- Forgot to add “Check out some of NickM’s information at Strategic Wealth Managment as well”
I believe Cata and Coasty Mike from the forum can also help point you in the right direction regarding Asset Protection.
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorYou could rent a own property from a discretionary or hybrid trust, but I would use a RE manager, just to keep it at arms length. I would not sell my POPR to a trust then rent it back as this could be seen as tax avoidence, but buying a new house is different I believe.
CATA
Asset Protection Specialist
[email protected]The ATO does not like people renting from their own unit trust, see:
TR 2002-18 – “Income tax: home loan unit trust arrangement”
Available from:
http://law.ato.gov.au/pdf/tr02-018.pdfTerryw
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
hi all
There are many types of trusts and they are for particular purposes and should only be organised by an accountant familar not only with trusts but with your state.
Different state allow and don’t allow different taxes for different trust.
The trust can cost $1,200.00 to set up but if the wrong vehicle is choosen then the loss or liabilty can be very high and it is relatively difficult to undo.
Not sure why you would buy a company family trust
I don’t know the qld tax but family trust and company trust I would not recommend in nsw for tax reasons and dispersions.
This is not financial advice nor is it recommending any type of trusthere to help
I believe that Steve uses (or used) a Family Trust set-up, TMA was happy with his company set up for his purposes, Some of the Asset protection specialists prefer Discretionary trusts and other Trust specialist recommend HDT’s..Unit Trusts I believe are usefull for Group Investing..
This is all what I’ve picked up though…………
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow Calculator
You must be logged in to reply to this topic. If you don't have an account, you can register here.
