Forum Replies Created
- Originally posted by Orion:
Hello all,
Thanks to all the people that have replied so far. From what I gather is that the ATO has no problem with the Hybrid Trust concept as long as the person who is living in the property which is being negatively geared is not a member of the Family who set up the Hybrid Trust in the first place.
Hang on a minute – wasn’t it you that held the gearing to but the units in the Hybrid Trust? or has the Hybrid Trust borrowed from someone else (as well as you) in order to buy the property?
In any event, if the tenant was related to you or your Trust (or even any beneficiary or unit holder of the Trust) then the taxman would look to see that the rental being charged (AND RECEIVED) was its fair market rental. When properties are rented within family structures they are sometimes rented for a lesser value or sometimes for no rent at all!!!
This would cause the problem with the acceptability of the whole ‘arrangement’ in the taxman’s eyes and therefore it’s tax effectiveness.
Furthermore, as TerryW said, don’t wave a red flag in front of the bull if you don’t need to so I don’t think I’ll be asking for a private ruling just yet. [
]Orion, that of course is your choice/right… however IF there is anything out of the ordinary with the Trust arrangement (and I’m not suggesting that there is from what I’ve read and hopefully understood) then you should perhaps reconsider your position.
That’s OK, Chris’s consulting rate for his members is fair… and even the higher rate for non-members could be money well spent too.[
]Judi (& earlier postee)
On the topic of Trusts (of varying kinds, how they work, when are they appropriate or not appropriate to use etc etc etc – Yes there are lotsa books and resources you could invest in. But boy o boy, the cost to buy the book/s may be small but then the time it will take you to get a handle on all of the above could be years!!!
Most of us who know and work with the various legal structures (he suggests with suitable humility) have studied them for years and know them almost backward and forwards and can help people apply the proper factors to their situation with far less pain – albeit at a cost to consult us…. You have to decide whether you can take the time to undertake the study in order to make an informed decision, or to invest the dollars getting good advice from your profefssional.
There’s bound to be books out there that will tell me how to remove my own appendix – even telling me where to buy cheap scalpels.. BUT this little brown duck wouldn’t attempt it in a pink fit!!
Similarly I believe passionately that anyone who wants to become involved in multiple asset purchases must take professional advice sooner rather than later.
Buying 3 properties and then deciding that they should have been purchased via a trust (or some other structure) can be financially very damaging later on… just think of paying the stamp duty and the lelgals all over again but now it’s on the increased value – wouldn’t that potentially knock the stuffing out of your hard won capital gains.
And let’s not forget that you would also be paying a share of the capital gain to the taxman at the time you transferred them to the Trust (‘cos you have sold them and made a gain)!!!
Take a breath and consider your investment future thoroughly BEFORE ploughing headlong into a investment strategy… P-L-E-A-S-E …. for your own (financial and mental) sanity. [
]Pica – I hope you’re not about to suggest an inflated contract price ? [
]Judi – Have you thought about an unsecured personal loan (from a mainstream lender) to bridge the gap?
The interest rate could be better than a 2nd and way less hassle.
Getting permission for a 2nd to exist (from the holder of the first)sounds easy but doesn’t always work out that way.
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