Forum Replies Created
My head hurts…. [stun]
Hi guys,
Gatherum Goss said the HDT MUST have a company structure which include corporate trustee. There is other way. He goes on to say that the banks will not accept anything less than a HDT with a company structure as it’s registered in the ASIC.
How many ways can a HDT be created? I am more confused now.
regards
ptnHi Mike
Gatherum Goss charge $2700 to setup the hybrid trust. You quoted $1100. Is there a reason for such price differences? Are there online application that are a lot cheaper?
Thanks
ptnThank Mike,
I’ll give Dale a call early next week. His site seems interesting at first glace.
Thanks
Regards
PtnHi Terry,
I originally wanted to open a Hybrid Trust but after talking to my banker at Westpac last week, he seems awfully shy and hinted complications. He said a DT is fine but HDT requires a lot of paper work and may have loan complications especially if some deeds are incorrectly spelt out.
As asdf stated earlier, a HDT requires $2k setup fee + $600 to maintain where as a DT cost $140 to setup and $280 to maintain.
From my understanding of HDT is that if an IP is worth $300,000, than I would allocate 300,000 units towards the setup of HDT. If I buy a 2nd IP in this HDT, I am required in amend the HDT adding more units share which could cost more. (Not sure how that works actually do you have any example of case study).Also I trade a bit of shares and like to roll my portfolio into the HDT. Will HDT create much complication if I mix shares and IP?
I would love to see a case study on how all this is done.
Kind regards
ptnHi Terry,
Been speaking to my banker about putting my next IP into a DT and he said that I need to personally guarantee the DT loan. How I structure the accounts is up to me. Trust has a loan of 245k and I have another equity loan of 120k. The loan is in my name and it’s for IP purposes.
I’ve emailed my accountant a few times and have not got a response indicating that question is too hard to him to comprehend. Which I’ve already suspected.
Any recommended account for Melbourne?
Thanks
PtnHi Elkam
I don’t own any Discretionary Trust; my aggregated IPs are reaching the $900k excluding my PROP and I’ve been investigate ways accumulate more IP but at the same time minimise my Land Tax bill.
At 900k I am paying $2680. If I buy an IP worth 350k, my next land tax bill will be $2680+$3500=$6180!!! but if my next IP goes into a DT, than I am only required to pay $1612.5 a saving of $1887.5 excluding DT costs.
Further more, aggregated IPs in this trust must be less than 540k or I’ll have to create another DT. Seems weird but legal. (I think) unless they get grouped as Cata hinted.
The negative is that I can’t negative gear any loss against my PAYG salary unless I do a hybrid trust which cost too much. [blush2]
The other legal option is to have 2 PROP. This is allowed if you moved from your PROP to an IP where you get 6 months of exemption.
In regards to CBD IP apartment requiring to pay land tax, I’ve asked all my friends who own a CBD apartment and they said it’s not in their land tax bill. And these apartments are over 300k each. [confused2]
Thank Elkam, I needed to confirm my understanding.
Regards
Ptn.3056,
I bought into an apartment 3-4 years ago and I am still down by about 100k. But I haven’t sold it so it’s only paper loss… if the market goes down another 100k, I am still at paper loss of 200k but I won’t sell. I know that property will appreciate sooner or later.
Just don’t talk to that property banker for a while.Just thinking 33000 immigration moving into Victoria p.a. Allowing 4 people per family; that’s 8200 properties in demand per year!. [biggrin]
Over the next 5 years that’s like 41,000 properties in demand.I tried to persuade my banker that my other IP are appreciating about 5% p.a and use that equity to buy more IP. If the valuation comes back the same than I just pay the fee $275.00. But hopefully they will all double in 5.1 years time.
If you’re confident about the share market, then diversifying is good as I can’t comment there.
Good luck and I hope your Town house appreciate but also remember that it’s the land that appreciates and not the structure. My IPs are mostly simple house with a large land 500-600SQM.
Regards
ptnI hope CATA could give some input into DT info on land tax and their implication.
Like you Elkam, I’ve bought Melbourne IP only and are forced into paying large land tax bill. I like to understand what happen if you have 3 DT each containing a 300k mortgage; are you forced to pay aggregated amount of 900k or just a land tax bill for each 300k value.
What if
DT #1 has only 1 director Me
DT #2 has only 1 director My Wife
DT #3 has Me and my wife.How can the SRO aggregate these properties? or can they?
Interestingly, I owe a city apartment under my name only but
the SRO land tax bill has no collection of this property. It appear that only IP in join name between my wife and I get aggregate.My brother inlaw reckons that the SRO finds CBD apartments too complicated to calculate Land Tax implication.
Regards
ptnIt does not matter, if you can afford to buy, then buy!.
Look forward in 5 years and you realise how cheap they are now. Mostly likely they will double.
Property are for long term investing. If you’re looking for short term, check the share market.
My advice is keep away from CBD apartment and new unit development. Buy houses with land because it will be the land that appreciate.
Good luck
Regards
ptnHi Elkam,
I’ve been eyeing this post for a few days now; hope to find an answer too. Hope someone can provide help.[cigar]
Any expert advice???
ptn.
Did you pick up an apartment recommended by Henry Kay?
I did… with my first IP and sure learnt a lot.
Anyway, I turned a bad situation into a positive CF. I furnished my apartment with all new goods. Costed an initial lay out of 15k but the returned an extra $200 pw. 3 months – 6 months ..Short leases but occasionally you get a good one. write off after 30 weeks and goods are still depreciatable over time.
However, I don’t think the apartment has apreciated to my cost yet. Already 3 – 4 years now
I hope this helps.
Regards
ptnGood on ya milly, you certainly have found a good formular, however how long can you survive with $130k going forward including cost + repayment. I assume you’ve buffered in the 30% LVR for low Docs.
I plan to do the same with my IPs … and I am basing on a 60k tax free living per year (that’s like $100k PAYG) however, with my limited equity, I can only afford to live for a few years before drying up my equity.
I believe the best formular is to have at lease 5 years of equity; based on Robert Ky.. the 72 rule. Interest rate x 72 = numbers of years that an investment will double. 6.5 * 72 = 4.7 years.
So… If I have $2M worth of Asset (IP), I need 30% LVR ($600k) + Living Equity ($300k) and leaving a loan of $1.1M before I can live off equity and stress free..After 5 years, I’ve used up $300k but my IP are now worth $4.0M So can I afford to increase my equity living to …OMG $400k pa… based on 2M worth of Equity for another 5 years…
That’s my plan.
Carpe_diem, Good luck and I hope my example gives some enlightenment.For others, keep accumulating IPs… as the next wave of boom might hit any time and the questing is… will you be on it.
Regards
ptnWith my IP, I refinance after 6 months and take that money as repayment so long as the total amount equates to the full loan. IE. 100% Loan + Duty + Lawyers + reno cost + Initial reno Interest. Works out to be about
IP = 300k, Duty = 12k, Lawyers = 1k, Reno = 20k, interest in 2 month = 4k. Total topup is $339k
Note: I have to put up a very strong case with the bank so that the value of the house is 410k with an LVR of 80%. or 375k at 90% LVR.Than again, I could just take that money out and go holiday… as it’s my original layout.
[cigar]Thanks,
Is that cost for Hybrid Discretionary Trusts or does it cost that much for Discretionary Trusts ? That over head is very expensive.
I will be using this trust for property investment as well as share trading. Would the setup and operational cost for Discretionary Trusts a lot less?
Thanks
Regards
ptnThanks gctaeger.
I must have read your answer 4 – 5 times before I totally understand. Must be me and finance,..
The next step is setting one up. Is there an online Hybrid Discretionary Trusts that I can setup? If so how much I am expecting to pay? Also, if not, how much should I expect my accountant to charge me for setting one up?
Secondly, If I buy an IP worth $300k and supply all the depreciation schedule, rental statement & interest; what I am expecting my accountant to charge me at my next tax return visit?Also, do I need to fill in bass statement every quarter?
Thanks
PtnHi guys,
Thank you for your reply. In our pursued quest for answer, the conveyancer said that it’s the water authority has failed to notify land office of the updated easement and should be liable; his job was to ensure that all outstand bills are paid to the date of settlement. The water authority said they are not required to. The architect said he acted on the owner’s (us) request to design the house and was working from the title description. The council said they’re sorry to hear this…
Darebin council being the worst response saying it’s not their problem. I am still p!ss off with their bad attitude. It seems they HATE developers building multiple units. I am over the fact that a mistake is made but to start the application off as NEW is really driving me up the wall. Another 18 months of waiting? [baaa][offtopic]
On a positive side, I could pick up another IP while I wait for this bad news to pass.
Ptn.
.Hi Derek,
Thank you for your concern.
Firstly, I posted this warn in the help section not to ask for help but to advice (even the experienced) investor about the potential risk during development. As I believe most experienced investor would check the help section learn further or with the interest to help other.
To answer your question, I believe the conveyancer normally contact the water authority to see if there is any outstanding bill rather than a direct check to see any easement unless instructed to.
I’ve checked all that I can and will contact Darebin council to advice of the bad news on Monday.
Regards
PtnThanks gctaeger, the example makes the HDT a bit clearer. I wish I have an exact example.
Taking it a step further, if I distribute the profit to my wife (being
a beneficiary) and incure the max interest; a $14k negative against my salary??? [specool]… wow this is mind blowing…[upsidedown][weird]Kind regards
ptnps: Can you please recommend an online site that does HDT?
My advice is to copy what other has done around your area. Can you afford to make mistake? IE. plans that no body like?
If you’re in to make money, than do what other has already done and proven successful; chances are they hired expensive architecture to draw it up anyway. Check the local real estate (all of them) and focus on new / sub division plans. Get the idea and get yourself a draftman to mimic the plan. Cheap, effective way. Further more, the council has plans with simmilar interest that has already been approved. You can buy it for $35 per A1 Sheet or $25 per set of A3 sheets.Good luck.
ptn
