Hello all,
I know there has been some talk about the use of trusts to purchase IPs. However there are some issues relating to the use of trusts that I wonder someone could offer some advice on. My partner and I are about to begin investing in property, at present both of us are on equal pay however this will change throughout the years. We plan to own many IPs! I am looking at using a trust as gaining loans will be a lot easier with both our incomes. I am not sure how deductions work with trusts? i.e interest, building write-off etc. Can you specify which income the deductions occur on? This in mind would a partnership be a better option although I believe the tax implications to be similar. Any help would be greatly appreciated.
Treatment of income & expenses are exactly the same in any entity, be it individual, partnership, company or trust. However the trust gives you the flexibilty to distribute the income as you see fit. For eg, if you stopped work, all the income can be distributed to you & none to your partner. Hence for tax planning, a trust is more flexible. However if you continue to work, then perhaps a partnership is cheaper.
Hello Whindes,
Just a quick addition. You will also be entitled to the capital gains 50% concession, as you would as an individual.
David Femia
Femia Property Group
Property Investment Consultants
http://www.femiapropertygroup.com.au
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