Forum Replies Created
Hi Terry,
The $1M is capital gain.
How would you distribute it to maintain minimum individual tax? Family Trustee are husband, wife and 2 kids under 16 yo.
Very interested in your response.
Thanks
regards
ptnHi All,
Thank you for all the response.
With regards to intention, we build those 2 units with the intention to live in.
We sub-divided the land into 3 lots; 1 existing and 2 new units.
1. We sold the existing unit. We should get the 50% discount CGT.
2. My brother moved into one of the new unit in April 2014.
3. Our family was supposed to move into the other new unit but after 6 months of schooling issues, we decided to sell the new unit instead. We sold the new unit in Dec 14. Not sure if we need to pay GST? Not sure if we get the 50% discount CGT?.Hi Terry,
The funny thing is that this was brought to my attention by a CBA mortgage manager. I can't deal with him since he knows too much about my financial position but he recommend that I research into trusts and mortgage broker.
Is there anyone here specialising in trusts mortgage?
Thanks in advance.
ptn
Hi Terry,
No offence taken and I agree, I don't understand trusts very well.
Yes, the goal is to get higher borrowing capacity.
In order to do this, I need an annual salary that is being paid by a company (or a trusts??). The 50k cash equity comes from refinance from the bank a year ago.
I guest what I am asking is HOW I can do it. (I've been told it can be done and have been done by wealthy developer).
Thanks guys,
ptn
Hi Terry,
1. The trusts has $50k cash equity.
2. The company will be a trustee of the trusts.
3. The company will pay me (individual) a fee for service.
4. Do I need to transfer the land into the company when it's just a trustee? confused why…If the company pays me as individual, then the bank only need to know about my income. Will they question the trusts or the company?
Thanks
ptnThanks for your answer guys,
The main reason I need to access the $50k now is because I need a bank loan for another IP. The bank won't lend me money because I do not have enough servicability (disregards how much equity or asset I have). I am told that the trusts can employ me to do investment activity and therefore pay a fee. In this case, an annnual salary.
I've also been advised to open a company on top of the trusts to formalise it.
Further more, as KG insinuated, when the trusts distribute 200k in the next financial year, I am up for 200k taxable income. By paying me early, I am reducing that hugh taxable income next financial year.
I don't know what is legal and what is possible. I am getting mixed message and the IP is extremely important to me.
Thanks in advance for your advice guys.
Ptn
Hi Michael,
I got a bit excited and with all the editing, I missed out the important part.
I have a family trusts which purchased an IP some time ago. This IP has some equity after refinance. I want this equity (borrowed $$ loan from bank) to distribute $50k to myself this financial year so that when I sell my subdivided lot next year I can claim that $50k distributed already. Assuming that I can sell the vacant lot for $200k.
Hope this is a lot clearer.
Regards
ptn.Thanks Terry,
So if I buy furniture; Plasma TV, HiFi System, Laptop, …etc. It can be a write off in CGT?
Regards
PTNouch … kicking my self now…
For CGT, what happen if I live in there and not pay any rent?
CGT will be calculated on cost plus interest so it would be minimal wouldn't it?
Curious
ptnHi TerryW
For a DT or HDT, can a non permanent resident be a trustee?
Also, when buying a new IP, you need to put in 5% or 10% deposit + cost, is this something that you can lend to the trusts now and get it back sometime in the future?
Thanks
PTNHi TerryW,
Just wondering,
The trusts purchase a new house for $300k. There is an $8k depreciation schedule p.a
Assuming there are 1 x Trustee (Husband) + 3 x Beneficiaries (Wife + 2 kids).
Let’s say I create 300k units in this HDT to buy this house.
Let’s say the rent is $300pw ($15600pa less agent)
Let’s say the interest at 7.5% = ($22,500pa)Scenario #1:
Trustee gets a loss + depreciation of $14,900pa.Scenario #2.
The income gets distributed to all beneficiaries and nothing to the trustee. Trustee claims $30,500 loss (Ints + Depr). Sounds too good to be true.Scenario #3.
The income gets distributed to all trustee + beneficiaries. Trustee claims a $22,500 in Interests. The depreciation is ignored.Or Scenario #4.
Trustee gets a loss of $6,900 only.Thanks
ptnThanks TerryW; for your positive respond.
I am curious, can you claim capital depreciation from HDT?
Thanks
regards
ptnHi All,
Following your advice to research more, I bought a book called ‘Family Trusts’ by Nick Renton (as recommended in previous forum). I have to admit the first 8 chapter are boring or going around in circle (a drag). I hope the next few chapters will pick up.
From what I understand so far, trust isn’t giving me any advantange at all apart from asset inheritant and some degree of protection if I die … which a will will solve this problem. But if I am making a loss (negative gear) then a trust will cost cost me more for administration. Options are HDT (next chapter)
It seems that only when I make a Positive cash flow can I distribute the money acordingly. Further more, I am restricted in what I can gift and what must be declared.
Can someone please let me know if I can do any of the following if I have an +CF; I can buy a car in the trusts, take a holiday and claim it as a trust expense, rent a house and claim it in a trusts? Can I pay my kids education from the trusts? Can I pay the nanny for taking care of my kids from the trusts?. …. I got a feeling I can’t.
As Nick said, if you’re not confused, then you’re paying any attention.
Confused
ptnThanks Terryw, you’re right, it’s not like I am going to add or remove a trustee anytime soon anyway.
Regards
ptnThats not necessarily true. If you add or remove beneificiaries to a trust, this could cause a resettlement to occur. This is when the ATO deems a new trust to be formed and all the existing trust assets transfered (ie sold) from the old to the new. This means stamp duty and possibly CGT on everything the trust owns.Ouch. This is going to be hard. What if I have 2 trusts; a property trust that has our family trust as trustee? My wife and I and the family trusts will be the trustee of property trust and everyone can be in the family trust. That way, if we move trustee in and out, it’s not tie to anything.
Just thinking outside the square.
ptn.Awesome,
Another question, if my mother in law is not a permanent resident in Australia, can she still be a trustee? IE. She is a tourist in Australia?
And the same question goes for a company shareholder?
Thanks
Kind regards
ptnHi Ownahome,
Your advice is very valuable. I am still pondering between a company (expensive setup and ongoing) or a family trust. I need to know the best way forward given the following scenario:
My family of 4 + my mother in law (5 trustee) . We buy an IP using this new family trust. If for some reason, we decided to remove my mother in law out of the family trust, do we pay stamp duty on the IP or are there some complex issue. Further more, if I add my father into the trust which already has an IP; what complication am I in for?Kind regards
ptnThanks guys,
I don’t want to approach an accountant or a lawyer at it will cost me $$$ just to say hello.
Thanks TerryW, you’ve given me a bit more confident in buying the family trust.
Regards
ptnSounds good. Thanks
I like to buy this family trust online. Any advise?
http://www.lawcentral.com.au/CreateDoc/createlink.asp?docId=17
My intention is to move one of my IP into this trust.
We have a family of 5 (including my mother in-law). Hope it’s not going to complicate the process.
Please let me know your thoughts.
Thanks
ptnIf you bought a IP in a company with a director and 2 additional share holder. What happen to the IP if you add an additional share holder or you liquate a share holder? do you have to pay stamp duty?
Thanks
Regards
ptn
