Hey, I am looking to seek information on the different types of trusts and what the pro's and con's are of each so i can decide which of the types is going to be the best for me. I plan to have my company as the trustee. Thankyou.
Are you thinking of negative gearing through a trust as this requires a hybrid trust and accounting advice on the tax implications.
These can be also know as PIT.
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4328668
Unit Trusts can be difficult to keep control as a person can sell their units to someone else you may not wish to have as part of your trust.
http://www.investorbuddy.com.au/property-trustshttps://www.propertyinvesting.com/forums/property-investing/help-needed/4334219?highlight=trust%2Ctypes
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4333604?highlight=trust%2Ctypes
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4332313?highlight=trust%2Ctypes
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4330678?highlight=trust%2Ctypes
https://www.propertyinvesting.com/forums/property-investing/help-needed/4330355?highlight=trust%2CtypesPlease be also aware of state land tax in some states charge a surcharge tax on trust ownership without any threshold on the surcharge. So if you owned a $1000 land value you are going to pay a trust surcharge land tax on it.
There is a book called trust magic that may be helpful also.
Hi Chalkergroup,
It all depends on what you are trying to achieve with your investing and what type of property you are investing in as to whether it is a pro or con. Are you able to provide more information on what you are trying to achieve?
Regards Maurice
Thanks for the replys guys. Well what i am trying to achieve is with my family members start a positive cashflow portfolio consiting of holiday rentals and uni boarding style accomadation. Also a few renovation projects would be instore as i am a qualified builder. So some buying renovationg and quick selling will be eventually instore for us.
There are generally two types of trusts:
Fixed and non fixed. a unit trust is a fixed one in that the trust must distibute income in fixed proportions to units held.
Discretionary are non fixed. The trustee has discretion on who to distribute to each year (from the range of beneficiaries).
A hybrid is part fixed and part discretionary.
There are also bare trusts. These are really fixed trusts as the trustee has no discretion ,eg. A owns something for B.
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
Cheers Terry thanks for that information.
Mate would you be able to tell me abit about the benifits of having a discretionary trust setup (because i think a discretionary is what im going for) rather than buying as an individual?
With a discretionary trust no one person owns anything. No one has an interest in the property of the trust (until a trustee has made a resolution to distribute.
This is very important for asset protection reasons because if you are a beneficiary of a trust and go bankrupt, the assets of the trust aren’t available to your creditors. There are some exceptions to this so careful planning on setting up the trust and its usage is needed.
The discretionary nature is also very important for tax minimisation reasons. The trustee can decide who to make distributions to and this can vary each year. What normally happens is that the family members with the lowest income receive distributions first as they will pay no or less tax and this can result in considerable savings.
Also assets held by a trust do not fall into your estate on death. So you can avoid challenges to the will and ownership need to change on death.
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
Thanks Terry.
Helpful info. Also are there CGT advantages apposed to holding a property as an individual?
Yes.
CG can be distributed to the lowest CGT tax payer too. eg you may have a relative with a capital loss and so the trustee could arrange to distribute to that person who may pay little or no CGT.
If you are an indiviudal you are stuck with the gain yourself.
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
so as a whole the trust would or would not be entitled to the 50% CGT discount?
chalkergroup wrote:so as a whole the trust would or would not be entitled to the 50% CGT discount?Don't forget trusts don't pay tax generally (unless the trustee doesn't make a distribution and then the trustee is tax at top marginal rate).
If an individual were to be distributed a CG then the 50% discount would be available if the criteria are met. If a company then not.
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
Beautiful thanks Terry.
Reading this thread with interest as i am now pretty sure i should be setting up a discretionary trust.
my problem is locating a property savy accountant in the Brisbane area.
any ideas please anyone?thanks
John
Hi John
Shoot me an email and i can certainly recommend an excellent Property based Accountant.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Thanks Richard
Email sent.
Will talk to you soon.Regards
John
You must be logged in to reply to this topic. If you don't have an account, you can register here.
