to create a discretionary trust or not?…HELP!

Hi all, love the forum. I’m new here but I’ve been mulling over an idea and time is running out…I’ve moved from one PPR to another PPR and my (new) accountant tell me that even though I’ve moved, I can sell the old PPR CGT-free IF I can do it within 6 months…well the 6 months has passed, but not by much, and he says as long as I can get on to it quickly, I will probably ‘get away with it’…the ethics of this are not the question…the problem is…I don’t want to sell the ‘old’ PPR…my great granddad built the house, it has sentimental value etc…I am wondering if I could set up a ‘discretionary trust’ and ‘sell’ the house to the trust, pay about $18,000 stamp duty (appalling!), but then I have ‘sold it’ CGT-free, and locked in an ‘on paper’ capital gain, but the reason I would even consider doing this is to minimise a HUGE tax bill down the track. The house has doubled in value in the past 2 years, so if I just ‘rent it out’, when I sell it sometime in the future, I will have to pay a big share to the government. If I set up the trust now and ‘sell’ the house for say $500,000, and it was worth $200,000 when I got it, then when I sell it in the future, say it is worth $1m, I will only be liable for tax on the difference between $500,000 and $1m, not the difference between $200,000 and $1m…the ‘cost’ is $18,000 or so stamp duty NOW, but that is a lot less than the extra CGT later on.

It also means if I set up my own business in a couple of years, the ‘old’ PPR is ‘protected’ from future creditors as it will be in a trust.

I have been agonising for months now about whether to set up a trust and transfer the ‘old’ PPR in, take the stamp duty hit now, to lower my CGT liability in the future and have the asset ‘protected’ in the trust format…has anyone been in this situation and what did you do? Any regrets? Thanks a heap, Naomi.

(Yes, I’ve spoken to a tax lawyer and he says since I’m on the lowest tax rate, no real benefit in setting up a trust, just extra maintenance costs for nothing, and the accountant says to sell the house, not to myself in a trust, but to another and free up some cash flow…but I want to keep the house for now, but I don’t want to pay the govt CGT on an appreciation that occurred when it was my PPR…)

thanks, Kooringal.