Shirley,
like Terryw I am a little puzzled by NW’s comment. For example, though I am not a tax accountant, I think that the distribution of the capital gains would not be taxable, as it is not ‘income’ but ‘return of capital’.
(See ‘Trust Magic’).
Also, why would it be a bad idea for the trust to pay off a HECS debt for the beneficiary, saving…[Read more]

Happy Dude,
welcome to the forum. You lend money to the trust – how else is it going to start investing? I believe that if your LOC is at 6%, you can charge the trust 6.25%. Why worry about the small amount of income on say a $30,000 loan to the trust (at 0.25% per annum = $75?) when you consider the benefits, e.g. a $200K property increasing in…[Read more]

Hi skippygirl,
we too have had unexpected costs!
Regarding guarantees: my wife is the sole dirsctor of the trustee company, but the bank would only accept a joint guarantee because all our assets were in joint names. (Refer Terryw’s post).
Cheers
Terry
PS to newbies: there is also lot of info on the Somersoft forum about trusts etc

Terence…[Read more]

Originally posted by ANUBIS:
… but as there is only my wife and I and we are already paying top dollar in tax there isn’t any major benefit to us via trusts.

Anubis,
interested in tax-free capital distribution, tax-free travelling allowance on trust business (e.g. looking at holiday homes for investment), etc?
Apparently there is an…[Read more]

Skippygirl,
don’t forget tax-free distributions from the trust: ‘Trust Magic’ p.147.
Dale G-G has said to me that one should almost never pay higher than the 30% tax rate – see Trust Magic p.139.
Perhaps the trust will have to have a very high after-tax income if any benficiary has to pay tax at 48.5%!
Terry

Terence McMahon
HomeWin
Finance

I also agree with Stu Wemyss. Do a forum search on unit trusts, and why you probably shouldn’t use a company to buy real estate…
Terry

Terence McMahon
HomeWin
Finance

Zimonya,
my earlier post said you can’t be the sole trustee and sole beneficiary; you can be the sole trustee but there must be another beneficiary besides yourself – essentially like a will (a trust has been descrived as a ‘living will’).
As a single person your will has beneficiaries (e,g, your parents) – you do have a will, of course!

Terence…[Read more]

Hi Bronny.
In SA your conveyancer can do everything – you probably don’t need a solicitor for a simple private purchase. Just make sure you have a different conveyancer than the vendor.
Terryw is right about the longer settlement, especially with the current industrial action involving the LTO.
Email if you have a question!
Terry

Terence…[Read more]

Hi CastleDreamer.
It’s my understanding that you cannot be the sole trustee and the sole beneficiary of a trust – the trust would be invalid. I think the laws relating to trusts say that you you can’t hold something in trust for yourself.
Terry

Terence McMahon
HomeWin
Finance

Hi.
After personal experience, and first-hand knowledge of others, I would avoid partnerships. There are advantages, but a big disadvantage is ‘joint & several liability’. Look at other structures first, as Mel has done!
From the 19th C: “the only ship that’s certain to sink is a partnership”.
Terry

Terence McMahon
HomeWin
Finance

Hi Risky,
welcome to the forum! Either I missed your first post, or I didn’t answer because you didn’t ask a question?!
My tip for newbies is to look back through previous posts and get a feel for the forum. Most newbie’s general Q’s have already been addressed. Also, read all the links on the home page – it may save you time!
Terry

Terence…[Read more]

mumof3,
I agree with Peterp and diclem (Sue). Go to the local library and look for books by Anita Bell; also Paul Clitheroe (about personal finance, not property!), Bruce Davis, amongst others.
Read ‘The Richest man in Babylon’ by George Clason if you haven’t yet done so.
Don’t buy the books if you can borrow them – use everything to reduce your…[Read more]

Rudy,
I agree with Simon – you would have no obligation to the R/E agent if you haven’t signed anything – he/she approached you.
Don’t be in a hurry to sell. If one developer is interested, then others might well be too.
A thought: instead of selling outright consider a joint venture with the right developer and taking a share of the profit from…[Read more]

quote:
… Many are saying that I will have to stand personally as guarantor for the loan, which will mean that funds borrowed this way would shortly dry up as banks would be reluctant to lend me money when I am guarantor on multiple loans..

Thanks,

Pegasus

I believe Steve McKnight got around this because the lenders did not ask him how many…[Read more]

quote:
Yep, Matt I got them to work. But I had to download three of them a second time.

Cheers
Mel

Melbear, love your posts – always get something from them!
Q: At your usual hourly rate of pay (from your investment activity) what did your download of the book cost?[]
Terry

Terence McMahon
HomeWin
Finance

quote:
Hi Allan,

Alternatively do you know of anyone else who is looking to buy? If you have a friend who is also interested in buying an IP you could both buy each others IP and rent them of each other – this way you have an IP and a friend for a land lord. Your friend lives in your IP you live in theirs. Caution here tho because one of you…

[Read more]

quote:
What if you set up a credit card account in NZ, have all the IP income put in the trust account. Spend in Australia off the NZ credit card and clear the debt with the income from the trust.

My understanding is that this is still regarded as income by the ATO as ‘foreign entity distribution’ or ‘foreign source income’ and should be…[Read more]

Hi.
Take a look at ‘Property Tracker’ at http://www.otter-software.com.au/. It’s Australian and it’s free; written by a property investor.
Terry

Terence McMahon
HomeWin
Finance

dougdot,
another way of looking at a strategy: if you work 50hrs per week in fruitgrowing what will the annual return be on that 2500hrs work?
If you worked 50hrs per week on property investing what will be your annual return?
Terry

Terence McMahon
HomeWin
Finance

Michael, I have a different view to you in some aspects:

quote:
‘A couple of others things to think about when moving iP’s into trusts is that when applying for finance banks tend to treat the trust just like a person ie. they will only use 30% of the trust income (rent) to qualify for finance.’

My bank calculated at 70%, the same as an…

[Read more]