Forum Replies Created
So if the trustee is a company and an individual is the director, the Family Law Act does not apply if that individual is sued by an ex partner therefore the assets in the trust cant be touched, is this correct?
If the person who is the trustee of a trust is sued for personal reasons such as ex partners are the assets in the trust at risk?
So are there any thoughts on the new elite investor pack?
johnmina
So does this mean as long as you dont have another property as a PPOR you can rent it out and if you choose to sell it within 6 years you wont have to pay CGT on it?
johnmina
thanks for that Terry that clears it all up, I appreciate all your help educating me. Don’t worry I’m sure I’ll be back with more questions, as the more I read the more questions come to me.
Thanks again
JohnHaha
after much reading and looking through your example I think I understand.
basically
Rent – Cost – Depreciation = (taxable income)then
(taxable income) – (depreciation) two wrong make a right
therefore
(taxable income) + depreciation = (profit)LOSSSo this is what you mean when you say depreciation isn’t coming out of my pocket.
Now do I get it?in in the case that there was a profit
taxable income – depreciation = profit
therefore reducing taxable income and this is how depreciation ‘refunded’
now have i got this last part right?Thank you
JohnThanks for that Terry
Thats much easier to understand so this will continue and when it does finally make a profit it will just reduce the accumulated net loss carried over from the years before. so even if it made a profit that year on paper it still looks like its just starting to break even due to the previous losses. Is this correct?
Now in terms of depreciation can the previous losses from previous years still be used to offset income when it is making a profit?Thanks for the example i think it really did help
JohnHi Terry
Im just a little confused sorry Terry.
So your saying that if the trust is making a lost I have to put funds into it, these funds cover the loss so the trust is at ‘Nil’, correct?
Now the trust can claim the deductions such as depreciation and investment cost but since the trust has no income it is considered more loss, yes?
Then these losses will be carried on to the next year, but if the trust is still not making any income does that mean I will have to further gift funds to the trust to cover the losses of the previous year and the current year?
I think I might be a bit more then a little confused.Sorry if im going around in a circle
But I appreciate your expertiseThank you
JohnHi Terry
when you say “Deductions can always be claimed by the owner of the builder and this will be used to offset other income” when you say builder do you mean the builder of the trust or what?thank you
johnwow thanks for that Terry
But what if the investment loan is in a trust and the trust is not making any profit yet therefore deductions cant be claimed right or have I got this confused? or would I simply just as told and keep it IO with offset.I understand what you mean by paying minimum and save the deposit. This has helped me realize that I could probably get the next one sooner then expected with the deposit already saved. but i should keep my LVR under 80% correct?
and thanks for clarifying cross collateral is.
Thank you very much
JohnHi Richard and Terry
Well I know now that using an interest only loan with a 100% offset is best but is it worth lowering the the principal of the loan to ensure it is positively geared. Because if I put all the money in an offset account to reduce the interest therefore making it cash flow positive and then later on use the money in the offset account for another IP, this would mean the interest on the first property would rise and if my cost are more then the income on that property then it would become negatively geared again. Is this correct?
Im trying to make it as safe as possible to ensure positive cash flow.For example at the moment I have a loan of 280k but if i reduce it to 250k it would become cash flow positive and then place extra money in the offset account further reducing interest but when I need that money at least I know that the first IP will stay positive.
Is what I’m trying to do correct/make sense or is there a better way?.Also If the second loan sits behind the first loan is this what is meant by cross collateral? If so shouldn’t this be avoided?
Then in regards to 1 if I was to borrow equity it is best to use it to further invest for the trust and just wait for the profits which I could then distribute as an income to use for personal use.
Thank you
JohnHi Richard
Thanks for that and thanks for the email again.
in regards to 2. so the best way to reduce debts in negatively geared property is making lump sums of cash from other properties ie selling, so besides the obvious are there any other ways I should know about?Also with 3 as long as I a secondary loan is taken out the original loan is not at all affected and treated as a new loan or have I got this wrong?
Thank you
John MinaHi
Thanks for that Terry that clears some things up. I’m just waiting for my accountant to come back from holiday and I’ll be speaking to him in a lot more detail, till then I’m trying to learn as much as possible.
I have a few questions about the equity of a property and if anyone can help it would be greatly appreciated.
1 In a trust structure is it possible to use the equity of a property for personal use or as a deposit for another IP?
2 If the equity can be used can it be used to pay back a debt on an existing negatively geared property to make it positively geared?
3 Does borrowing the equity from an IP increase the loan repayments of that loan or is it just borrowing against the equity and is a different loan all together therefore having its own repayments?Thank you
JohnHi Terry
I have taken your advice about doing more research about trust and I wanted to ask two of many questions.
1. After 80 years the trust must distribute all assets, so my question is what is the solution to keeping these assets to pass down them down to my children in the future?
2. If a property is negatively geared the losses stay in trust (DT). So those losses are paid out of my own pocket and cant be tax deducted, is this correct?Also I wanted to clarify what did you mean about doing the sums? Im willing to put in the time i just wasn’t sure which numbers i was suppose to be crunching.
Thank you for pointing me in the right direction and appreciate all the help
John Mina
Thanks for the heads up Terry.
So what do you recommend I do before my next purchase to set things up right? That is if there is anything else I should do.
Thank you
JohnThank you for your advice.
So would it be worth setting up the trust even if I only have one property at the moment or should I get a couple more under my belt before I set up a trust? Also how easy will it be later on to transfer property in my name to a family trust or a corporate trust?
I just want to be able to build a firm foundation by getting as much information as possible to avoid hurdles that can be taken away.
Thank you both once again for the advice.
John Mina
