harder to finance means harder to sell generally.

Oh i just realised that first post was written in 2010 so 14 years ago!

Borrow to pay it is one option.

Did you do some planning before purchase so you could minimise land tax?

If you sell you will likely pay CGT and will loose future capital growth. You would also be up for agents fees and if you later buy something else more stamp duty.

Do you guestimate they will be growing more than they are costing you? if so it might be worth holding. ALso have to factor in the opportunity cost of having the money tied it, the extra non-deductible interest you are incurring as well as the negative cash flow

There should be no need for a private ruling for a question like this. basic tax advice should be enough.

tobymorrison42 wrote:

As you will read in my linked screenshot, investing through a trust does not seperate you from debt in your personal name or other trusts that you are associated with. This is straight from the mouth of CBA and multiple accountants and brokers that I have discussed this with. If anyone’s experience differs, please let me know as I’m very curious to get to the bottom of this as I’ve heard different truths from many different people.

I am a trust lawyer and mortgage broker of 24 years and you have misunderstood a few things here.
A trust cannot borrow as its not a legal entity, just a relationship. It is the trustee that borrows. If hte trustee is a company the loan will be taken out by the company with the director giving a personal guarantee. that means it is not a debt of the individuals, it is a debt of the company in its capacity as trustee and personally.

If a 2nd company then borrows, in its own right or as trustee, the debts of the first company are not debts on the new company so they wouldn’t be taken into account. But the company can only borrow with the benefit of the personal guarantee which will mean that the loan guarantees for Company1 is taken into account, but there are several lenders out there that will disregard loans guaranteed, for the purposes of serviceability, if certain conditions are met.

CBA is one of these lenders too.

If the trust’s income is going to be less than the tax free threshold there may be no tax benefit for the trust to claim depreciation. but it would still be added back to the cost base on sale, but there is an exception to this if the taxpayer doesnt know what the depreciation values are so the trust shouldn’t get a depreciation schedule if it hasn’t already.

see

Practice Statement Law Administration
(General Administration)
PS LA 2006/1 (GA)
Calculating cost base of CGT asset where there is insufficient information to determine any Division 43 capital works deduction

https://www.ato.gov.au/law/view/document?locid=%27PSR/GA20061/NAT/ATO%27

You need to apportion the cost base expenses between the 2 blocks and the best way to do that is to instruct a valuer to do it. The other block has a house on it so it cant be worked out on an area basis. Your valuation would be done as of the date of purchase. Main residence exemption can’t be used on vacant land and can only apply to 2 acres anyway

The trustee would need an express power in the trust deed to rent to a beneficiary.

But if the trustee as the same company you are referred to? There is a common law rule against contracting with yourself, even in different capacities. but the ATO seems to allow it for tax purposes. Best to seek legal advice

An asset held by a trustee of a discretionary trust is not an asset that you own, so it is the same as paying off someone else’s loan. It has various consequences so best to seek legal advice. One strategy might be to lend your cash interest free to the trustee instead and let them pay off the loan with the loan from you. Another may be to gift to the trustee.