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  • Profile photo of TerrywTerryw
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    @terryw
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    If the properties were held in separate trusts, would each trust get its own threshold?
    At what point does “grouping” occur?

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    Depends on the state. In NSW and VIC = no. In QLD maybe, it depends on how the trust is structured

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    They can’t. But a company they may control could pay them. Why do you want to pay yourself a wage? This is taxable in your hands. If you have a company that owns property and it pays you all the rent it will be the same, income wise, if you owned the property.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Profile photo of TerrywTerryw
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    I have never heard of this happening before – thanks for the warning.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Profile photo of TerrywTerryw
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    CGT and stamp duty on the transfer. new loans.

    And trusts cannot retain income without paying top tax rate.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Profile photo of TerrywTerryw
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    You cannot contract with yourself and your cannot ‘retain’ profits – you make money, it is yours.

    If there was another entity then it could pay you = spouse, trustee, company etc.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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    Profile photo of TerrywTerryw
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    Are you running a business? separate entity?

    If not you cannot pay yourself a wage.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    in that case I would say they are capital costs.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    Thanks, even the fees charged by my bank from paying out the loan are capital costs?

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    NEver heard of a bank charging for phone calls or faxes.
    If they are fees charged by a lender then they possibly could be borrowing costs and claimable over 5 years.
    Best to seek specific tax advice.

    Sorry, you have sold your property. So these appear to possibly be fees in relation to the discharge of a mortgage and loan.

    • This reply was modified 9 years, 5 months ago by Profile photo of Terryw Terryw.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    certainly not deductible but shuffling money around.
    Max possible to claim would be $370k, but could be much less.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    not deductible against income. capital costs

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    Hi Derek

    What you have said above doesn’t make sense. A trust cannot be a director, only persons can be directors. A trust doesn’t even have a director, but there may be a company which is a trustee of a trust. A trust cannot hold equity, but a trustee could take a mortgage over other property owned by others.

    Not sure how this could leverage borrowing capacity though.

    A person could rent a property owned by the trustee of a trust of which they are a beneficiary, but many issues to consider.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    You’ve had advice from everyone except the lawyer. A SMSF can only borrow to acquire a single acquirable asset and the asset must be held on trust while there is a mortgage.

    But you are talking about a unit trust being involved. Under reg 13.22C a SMSF can own units in a unit trust under certain condition, one being that there is no mortgage or encumbrance on the unit trust itself.

    But if it is a widely held unit trust then it is possible for the unit trust to borrow – if it can find a lender. Your SMSF or associates can have no more than 50% (or 49%) of the units of the trust.

    It is likely that the lender knew about the SIS Act, but didn’t know about the borrowing having a SMSF involvement.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    You will essentially be lending the buy the 20%. You will need legal advice on the terms of the agreement.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    Yep Jamie is right. Simply drawing down a loan doesn’t make the interest deductible. Deductibility depends on what the funds are used for.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    It sounds like you want to set up a trust not a trust account.

    I am a trust lawyer – ask away.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    If it wasn’t you one could buy 50% off the other and borrow to do so and claim the interest once rented out – it could be done with no stamp duty. But it may still be worth doing now – one buy the 50% share of the other so they become the sole owner, you just have to pay stamp duty. At least this allows you to increase deductions and keep the property.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    Is the Sydney PPOR in both names?

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    Sorry to hear about your situation. This sort of thing is fairly common unfortunately.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    other investments how long it needs to be invested before it’s legally able to be moved onto the new PPOR loan?

    It can never be moved out to the PPOR loan. If you borrow to buy shares and sell those shares the interest on loan loan will no longer be deductible.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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    Profile photo of TerrywTerryw
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    If you had a $100k loan, non deductible, secured by the home you could set up a separate loan of $20k also secured by the loan.

    You would then borrow $20k from the above loan and $80k from a new loan secured on the IP = 100% borrowings with no crossing of securities. Interest on both loans will be deductible against the IP income (assuming set up correctly).

    You should never use $20k cash as you will end up paying more no deductible interest.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
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