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Hello,
Thanks for posting this topic – and for every-ones replies, as we too are considering if purchasing a property we want to live in, should be held in trust, while we rent it back to ourselves, as you say MadProperty.However, is there a conflict of not being at "arms length" and you will be living in the home, and also benefiting from it as a beneficiary (technically)?
We are interested in this strategy fro a number of reasons, one of which is that our current PPOR is almost paid off, and we were hoping to keep it as a rental, while we upgrade – so we have the problem that our equity is stuck in that house, hence it is not the most tax effective investment.
However, I seemed to remember the ATO will allow one to keep the PPOR status on one's home for up to 6 yrs) if you intend to return to it – so I'm assuming the CGT & land tax exemptions still apply in this instance.
I would also appreciate it if anyone can offer, or refer me to information about the mechanics and accounting issues for this strategy IE:does this also mean you forego any the tax benefits – and what about declaring the rental income received?Thanks!
M.C.Hello all,
Similarly, we are in the process of setting up a discretionary trust, with company as trustee.
Our plan was to purchase next IP property in the tust (company as trustee) and the formal advice we have been offered is to apply for the laon in our own names, then loan the money to the trust with a formal loan agreement of course (at 1% interest higher rate).
This is in effort to unloack some of the tax deductions one misses out on, when the IP is held in trust. Does anyone have any experience or knowledge about how this works in practice? IE is the new IP to be purchased NOT offered as security against the loan?
We also have 3 properties currently – all in our own name and all corss-collateralised. Is it nessesary to secure the new IP loan against our existing portfolio, or if it is actually possible to offer the new property to be held in trust as security to the lender, when the loan is in our names?
Thanks for any insight anyone can offer.
M.C.
