All Topics / Finance / Borrowing under trust, using Security under personal name. Tax Benefit?

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  • Profile photo of adam.padam.p
    Participant
    @adam.p
    Join Date: 2012
    Post Count: 22
    September 1, 2017 - 5:18 pm

    Hi all,

    The loan is for investment purposes, just want to know in term of tax deductible possibility.

    1.) If borrowing money using family trust (company trustee) but using the IP under personal director’s name as security, will the interests on the loan deductible in the family trust?

    2.) Assume point 1. above is deductible. Can I refinance the IP but the new loan will be using family trust? Basically changing loan name from personal name into family trust (by changing lender). Is this possible and is it still deductible in the family trust?

    I must be missing something.

    Thanks for help.

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213
    September 1, 2017 - 9:58 pm

    1. Deductibility doesn’t depend on the security for the loan – this is largely irrelevant. It is the use of the funds that determines deductibility. If the trust borrows to invest the interest would be claimed by the trust.

    2. no.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of adam.padam.p
    Participant
    @adam.p
    Join Date: 2012
    Post Count: 22
    September 4, 2017 - 9:36 am

    Thanks Terry.

    That make it clear.

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