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Aside from the finance side of things, do you really think these would make a good investment? banks are wary of lending for good reason. These sorts of units are hard to sell, and this can limit the capital growth.
Terryw
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North Sydney
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Hi Redwing
With a HDT the loan needs to be in the individuals name for them to claim the tax benefits. So far I have seen 2 clients with HDT in place, but they had the loan in the trustee company’s name – unaware.
If it is not a HDT, then I am not sure if it would matter whose name the loan was in, from a taxation point of view anyway.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by Brizza:Originally posted by lifeX:You can have the loan in your name and the title of the property in the trusts name for neg. geared scenarios.
Then, the trust is making a profit. And you still get to claim the loss of the loan interest against your own income.
Called Hybrid Discretionary Trust.
Live, Learn and GrowLifexperience
If this structure is used, is the FHOG still able to be claimed as the loan is in my name? Or because a trust is on the title, does this make the FHOG ineligible?
Brizza
FHOG is not available if buying thru a trust.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Calvin
Homepath don’t deal with brokers. I beleive they are a no frills type lender and probably don’t offer an offset account on their cheaper products. I have also heard that they are slow at settling loans.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There is a book going on ebay for about $5. I just posted a link in another post.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
It can be rewarding if you get the right property. My friend picked up one in Macquarie Fields in Sydney (the area with the riots recently). She paid $140,000 and resold it a year later for $269,000.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Depending on the property, at least 30-40% I think.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by FFComm:Usually there is a CGT rate of 30% for companies, with trusts you get a discount of 50%, therefor 15% (I am assuming that you could move the CGT through a company if you wished).
FFComm
That’s where you have it wrong. Discounts for CGT are only applied in the hands of the beneficiary. Companies don’t get the discount, and therefore would pay 30% CGT on any capital gain.
BTW, I am not an accountant, but this is my understanding.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by kerwyn:Hi Richard
You question covers a broad area and really depends on what you want to achieve?
Are you after tax minimisation then a Company is the way to go as you only pay 30 cents in the $ tax. Plus if you are running a business and making a profit from property investing Eg doing renos, you can claim nearly everything to do with property.
If you want asset protection then a discretionary trust is good with a company that does not trade as the trustee on top and the trust underneath. It is good for minimising capital gains also.
I know some people who have a trust for every house they own. So if they are sued, say by a tenant then only that house is venerable and all the other properties are safe.
As our legal system is linked to the British system a trust is common law. It came into existence when an over zealous British king tried to steal the church lands and possessions. The church set up a trust under Joe Blow the farmer who owned nothing as trustee. Since the king could not get anything from the farmer as he owned nothing he could not get access to the trust to steal the churches lands. This is an abbreviated version of the story but close.A company is Admiralty law and is in essence a person who never dies. It can have one or more directors who do not own the company as such but are employed by it. It has special tax laws that are much more flexible than what a normal person has. So if you are going to do property as a business then you should start a company. You can get a shelve company set up for around $1000 and a trust for around $300 to $500.
You can contact Castle Corporate Services PTY LTD on 03 9898 6666 and they will help you out.
KerwynHi Kerwyn
I would ahve to disagree with some things.
A company may not be the best way to go to reduce tax. 30% tax is fairly high. By using a trust, you would have the ability to distribute the income to beneificaries on a much lower income resulting in no, or much lower tax. If no one was available, then you would then be able to distribute to your company and pay a max 30% as a last resort. With a trust, at least you would have the option, and could change it every year.
You can also claim the same expenses without the need for a company.
So someone looking to get into property at a business should really look at a trust setup rather than a company.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Originally posted by richardb78:Hi everyone!!
As the title indicates, unfortunately i have no idea how trust and companies work. I have read some of the replies to other q’s on the forum.
I really would just like to know if anyone out there can recommend books to read in this area. I would rather have a basic understanding of what it is and how it works for property investing.
Im trying to decide whether i should create a company, trust or both for future investments?
thanks heaps!!
RichA good book is
Dale Gatherum Goss “Trust Magic”, http://www.gatherumgoss.com
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Redwing
I think one of the benefits of using the SMSF would be when you have retired, transferring a trust property to the SMSF and then selling the property, and getting the reduced CGT available to SMSFs.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There are various rules which were designed to prevent losses being utlised by unrelated entities. Its a very complex area. Maybe you should search on the ATO site in the legal database for ‘trust losses’
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I haven’t heard of this before, do you have any further info, name of firm etc?
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Your wife would have to be on the home loan as she is on title.
With the trust, the loan would usually need to be in the trust name with guarrantees from the trustee (or directors of the trustee company). So this would depend on how you have set the trust up.
ANZ have recently caused problems with one of my clients with a HDT – They refused to put the loan in the person’s name (director of the trustee).
It seems they sometimes do and sometimes don’t.
If you wish to maximise tax benefits, maybe yourself and your wife could enter into a loan agreement with yourself or your trust. SO you wboth borrow the money from ANZ and then on lend it to the trust/trustee. that way interest deductibility may be transfered.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
There would be no problem with getting the loan in the trusts name. Can also be done as a low doc if other criteria stacks up.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Richard is the right person
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I think CGT will become a huge problem for many people in the future. eg you purchase a $200,000 property 7 years ago, now worth $1,000,000. thats a $800,000 gain = $200,000 in extra tax if sold. And it will only get worse!
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I’ve spoken to a few banks about this, Liberty, Adelaide and Bankwest have said they would do it (in theory anyway, haven’t actually tried). It may depend if the second mortgage will be registered.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi Jenny
What happened with the default? It maybe that there may be another person with the same name as your husband. Should have probably supplied them with a copy of your CRAAs for additional proof.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
You can also get a copy online with the land titles office in your state. costs about $6.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
