Hi all,
My wife and I are about to commence building our 4th investment property. We currently have them all in both of our names. Upon reading Steve’s latest book, this is not a cleaver way to structure a property portfolio. What is the criteria for setting up a trust fund and how exactly do they work? Are there any tax inplications that I should be aware of? For example capital gains tax etc. Any help is greatly appreciated….
Setting up the Trust is relatively easy subject to a a few consideration however transferring your existing Investment properties into the new trust will be a fairly expensive exercise.
Stamp wil be payable on the Transfer value and you may also trigger a GCT issue so think carefully.
Mayble talk to your Accountant and make sure that furture properties are purchased through your new structure.
Another consieration is so ensure that your loans are structured correctly as well as this can also lead to problems in both serviceability and also if you ever wish to sell one fo the properties in the future.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Thanks Richard. I booked in this afternoon to see an accountant about the big picture. Appreciate your thoughts.
Some tax implications with trusts are:
Land Tax
LossesHopefully these are outweighed by the increased flexibility in distributions of profits to reduce taxes overall.
Terryw
Discover Home Loans
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Send an email to get my newsletter.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Perhaps a few questions to ask your self to help arrive at this decision may be
1) Are you planning on doing anything dishonest, for which you may be likely to be sued?
2) Do you need to have a structure set up in order to distribute your income to more than one or two people?
3) Are you planning on not having landlords insurance on any of your IP’s?
4) Do you know people that have been sued, and or lost their property, other than via ‘messy’ marraige break ups.? Is this a concern?
5) Are you aware that some style of trusts and so called ‘hybrid’ arrangements may at any time be scutinised by the ATO, and if found to be tax loopholes, and ‘closed up’ you may be liable in this case?
6) Have you spoken to an accountant or qualified financial planner that has real life experience with the pro’s and cons of structures like this, who can give you genuine unbiased information?Lots to think about, and I am certainily not making a recommendation for or against anything, All the best with you journey, and congratulations on achieving what will be ‘number 4’. [strum]
Hello kpi
Why don’t you do a search (under the forum button above) for trusts on this forum. A lot of useful information has been written about this topic here. It’s good to have the basic information before you go and see your accountant. I have found that the more you know about a subject the more useful your accountant is.
I see your from Victoria so I assume your properties are in the same state? There are certainly land tax implications for property held in trusts. In Vict. there is a surcharge of 0.375%. However due to the nature of aggregation and depending on the value of your current property, this may be the lessor of the two evils. I was struggling with this some time ago. You may like to read the thread.
https://www.propertyinvesting.com/forum/topic/23233.html
Please note that while I spoke of a land tax free threashold of $200K in these posts, this is true if the property is in your own name. Property in a trust only has a $20K land tax free threaashold. However, if you already own 3 properties, you may have already exceded this threashold anyway.
Hope this helps [smiling]
Elka
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