ATO phone people are rarely correct!

You can do it all yourself – just like dental surgery or cornia transplants. But it may not be a good idea as you don't know what your don't know.

I had a client come in and see me about something and in passing he told me he was buying his wife's share of an investment property. However the way he structured it none of the interest on teh loan would have been deductible because of a simple but crucial mistake. Also he was not aware of the succession aspects, but it was the tax mistake that was the biggy.

I think everyone should beware of statements such as this. It is not correct to say most people should stay clear, perhaps better to say this is something that may not suit most people but there is nothing wrong with this strategy. It is one of many strategies and may be considered.

It is not the same as a hybrid discretionary trust. completely different.

CGT is a commonwealth tax so no matter where it is there would be tax payable. Stamp duty is state based, in NSW you would pay 0.6% stamp duty on the transfer of the shares which would be much less than transferring title to the property. Also stamp on shares in private companies are supposed to be abolished at some time – possibly next july.

The PIT is nothing special. Any trust properly set up in SA would potentially have the ability to have no vesting date – however this doesn’t mean they won’t need to vest after 80s

There are an infinite number of ways (exaggeration maybe) to set something like this up. It will all depend on heaps of factors:

– individual circumstances

– which state

– stamp duty

– land tax

– your family situation

= asset protection issues

– succession issues

– degree of trust

– equity

– need to bring in more partners

etc

etc

You would have to settle on the land first and then settle on another loan for the construction. This will be paid out in stages as the build progresses.

Check this with your broker.

Ha ha. Yes, I had a client come and see me because they signed a contract to purchase property in a SMSF trusteee name rather than the bare trustee name.

seen another client with multiple trusts all set up incorrectly and the family had structured things completely wrong, It would be costing them $100,000s I think.

There are 3 ways this could be taxed. It may end up being a combo. It could be treated as capital account unit a certain point and there after on income account. Seek professional addvice

 A trust is a separate entity for tax purposes. If the trust owns property and rents it out the rent must go to the trust. You or the trustee will have to read the trust deed carefully and then distribute the income to the relevant unit holders in accordance with the deed.

This is very complex area, did you get proper advice?

A trust does not exist as a legal person so it cannot buy property. A trust is just a relationship between the trustee and the beneficiaries. What happens is a trustee buys a property to be held on trust for the benefits of the beneficiaries.

Now to answer your question, if a trustee buys property and the individual gets the loan then from a tax point of view the trust will claim the interest and not the person.What you may be referring to is where a trustee of a unit trust purchases the property and the unit holder borrows to buy income producing units. Depending on a few things this allows the individual to claim the loss in their personal tax return. ie it indirectly allows negative gearing in a trust.