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 capital value at say 5% = $10K… Just a cost of doing business.
Establish a separate sub-a/c, e.g. LOC, from your home loan to provide the funds to the trust. This will make your accounting easier.
Read all of Trust Magic .
Terry

Terence McMahon
HomeWin
Finance

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 individual in Aust. who recently received around $17,000,000 tax-free from a trust in one tax year – anyone know the facts?
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

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 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

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 card and car loans ASAP.
Terry

Terence McMahon
HomeWin
Finance

quote:

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… 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

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I believe Steve McKnight got around this because the lenders did not ask him how many loans he had guaranteed.
Using a trust doesn’t necessarily mean you can buy more properties than you could as an individual.
A trust is used for asset protection and some tax advantages.
You need to provide guarantees until the trust has enough assets to satisfy the lenders.
Terry

Terence McMahon
HomeWin
Finance

quote:

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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 might want to move or want out and the other might not be happy with that – it is important to have this drawn up on paper so you can both refer to your obligations etc if a split seems likely.

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Riffraff, this is probably a theory that doesn’t work in practice. The ATO will look at this and see that there is no commercial purpose for this arrangement, entered into solely to avoid tax, and deem it tax evasion. At the very least they will disallow any tax deductions. Investors would have been doing this years ago, otherwise.

2004: “What the mind of man can conceive and believe, it can achieve, if approved by the ATO.” []
Terry

Terence McMahon
HomeWin
Finance

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

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

quote:

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‘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 individual.

‘I don’t believe it would be benefical to use you personal income to go guarantor for a trust as it may restrict future opportunities.’

How else is the trust going to get started in investing?
It doesn’t have an income until it has income-producing assets. Your future investing would be through the trust.

‘Personally I plan on waiting until my ip’s are paid off or nearly paid off until I put them into a company/trust structure.’

Doing this surely you miss on all the legitimate tas deductions for the trust on the way, and there are lots that are not available to you as an individual. Plus you pay stamp duty transferring them into the trust later. New IP’s, and other investments, would be bought by the trust.

‘My plan is to put high profit earning ip’s into the trust first and keep property with the most deductions in my name. The first house to go will be my ppor as I wont pay CGT.’

You may be better off using a hydrid discretionary trust, since you can still obtain the benefits (?!) of negative gearing.

‘Just some ideas

Mick INC

PS. I also found that my B(W)ank wouldn’t offer the basic loan package to the trust so you may have to pay slightly higher int rate.

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‘

My bank included everything into my Professional’s Package which had existing IP loans – no difference.
Terry

Terence McMahon
HomeWin
Finance