If you are entering a partnership, then there are many ways to structure it such as Unit trusts, Discreationary trusts, company, or individual names. You should talk to an advisor on this to be sure on the best one. You may even need a partnership agreement to make sure everything is covered.

You do not need to set up any structures, but it would probably be better if you did.

Loans would depend on the structure. If using a company or trust, then the directors and/or trustees would be guarranteeing the loans. If your own names, then both partnership would be getting the loan. Eitherway, both each partner would be resposible for the whole loan. So if one stopped paying, the other would have to cover it. This eates into your serviceability.

I have purchased property in a partnership before. Once went ok, but the other time the other party decided they wanted out and I had to either sell the property or buy their share. Which was nothing major, just a hassle really

Terryw
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North Sydney
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1. Setting up companies and trusts will not affect your borrowing capacity as you will be required to personally guarrantee the loans. So the banks will assess the deal on your personal income. There is no difficulty in borrowing using a brand new trust or company structure.

2. There would be not advantage, from a borrowing point of view, in buying the property as trustee. It will still have the same amount of equity available whichever name you bought it in.

3. Holding no property in your persoanl name may work against you (slightly) as you will have no assets the lender can go after if it all goes wrong. But you would still be in a position to give personal guarrantees.

Terryw
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North Sydney
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Banderos

I can see nothing wrong with trying to minimise tax. I do not think you would be queried on your purpose in setting up a trust – it is done every day of the week.

But I am not an accountant!

Terryw
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North Sydney
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If you are applying for a full doc loan, then you would need to show full tax returns for the trust and Profit and Loss statements. If you guarrantee the loan – which you would have to do in any case, the bank may still want to see the icome statements for the trust if you are relying on this income to service.

Terryw
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North Sydney
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Terry

I think Aussies would have to pay tax in Australia on income earned in NZ. So even tho there is no CGT in NZ, they will have to pay CGT in Australia on any gain. Hence the benefits of a trust – to reduce tax.

But I am not an accountant so may be wrong.

Terryw
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North Sydney
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That’s just the way it is. The govt likes to collect revenue and this is just another avenue. The stamp duty cost for a trust is $200 in NSW.

Terryw
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North Sydney
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I have a copy of the old kit. It has a some victoria specific information, but generally the concepts will be the same in every state. You will have to get your own contracts drawn up anyway.

Terryw
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North Sydney
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I am not actually sure, but after reading Richard’s comments, think it would be the original contract date, 12 June 2004 in your example.

You should be able to find something on the ATO site to confirm, or give them a call.

Terryw
Discover Home Loans
North Sydney
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It is also possible the vendor will just let you out of the contract.

Terryw
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North Sydney
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TMA

You can also do that with a trust. There is actually a tax ruling on it when done using a unit trust (ie they don’t like it!).

I think Derek is right about the CGT issue. Pre 1985 properties will be CGT exempt no matter what – so you may still be able to class another as your main residence as well.

Terryw
Discover Home Loans
North Sydney
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