Hi,
Since the weekend I have made enquiries into having a trust/company structure to purchase further properties. I had asked the question of my accountant (in fact 2 of my accountants – in the past) and he said I should keep buying in my own name.
I know everyone’s situation is different, but, I am considering what I heard at the APIM and feel that I need protection. Hang on have I just answered my own question here?
My accountant (who is well respected and successful) said that a trust would not offer more protection and not offer me ‘unlimited finance’ – which are the two things I want.
I have bought a few properties thus far – to buy and hold.
I am now confused – I am planning to speak with more ‘experts’ next week, however I am wondering if anyone of you knowledgable people could possibly throw some light on the these questions:
– Do you prefer to buy in your own name?
– If you prefer to buy in a Trust what is it exactly that made up your mind to go with the structure?I hope my questions are not too personal – I am new on the forums so please excuse me. I would appreciate some opinions as part of my research?
Good Luck and Happy investing.
V[
]hi Violeta
You said you have asked your accountants in the past about trusts. Maybe you need to go and ask the question again as your ambitions on just excactly what you want to achieve in property investing may have changed. When I set up my company trading with a trust fund my Accountant and lawyer dicussed what would be the best asset protection that suited my situation. Maybe this could work for you and it is also a good thing to have an accountant and lawyer that understands what you are doing. They are out there you just have to go looking for one and then the process is much more easier when all parties are on the same wave length. Congradulations on purchasing a few properties. Keep up the good workRegards Rachel
Don’t just sit on the fence and say YES BUT. JUST DO IT!Hi Violeta,
I think accountants think if you do not run your own business it is not cost effective to set up trusts – you are in a low risk category for being liable for large sums of money. However, once you start investing in property you cannot afford to expose yourself to being sued eg when you did not repair something on your property and a tennant broke a leg – your insurance will not cover you if you were aware of a problem and did not fix it.
So if you intend to buy more than one IP – set up trusts.
Good luck[]Hi,
My take is that the reason you would go for a trust is in fact protection. The key to remember is that you control it, via a company that is limited to the value of $2.00 and you control the distribution of income/profit through the beneficiaries.
Additionally as I understand it, you also have the 50% GST deduction as you would an individual.
As for finanace, the fact that you would be the gaurantee on the loan leaves you in the same boat as an individual investing in there own name. The bonus is again protection, if you have 20% deposit, then you can get a first mortgage on the property, and not cross collateralise (cant spell).
Hope all that made sense my brain is a little squishy just came back from a Cold Chisel concert.
Regards
SimonHi Violeta
As I don’t know your accounts this is just speculation, I think maybe you have the wrong accountant. We had an account up until last Sunday when we decided on our way home from the semiinar that he just didn’t fit out plan. So on Tuesday we found a new one, he has actually written a very good book about trusts which I have to say if mind blowing when you learn of the little tricks (thats really funny that I wrote that because his book is called trust magic) you can use.
Be sure you have the right players on your team that aren’t putting hurdles in your way.
Good Luck
Cheers
Leigh K[]Read, learn, grow but most of all just do it.
Well done Leigh you obviously have met Dale Gatherum-Goss. He is a good bloke and knows his stuff.
Violeta if your accountant questions you again I wuold walk and find a more competent advisor. Even if they are slightly iffy. One of the most important parts of your success is your team. If you are not all pulling together in the one direction then you are at odds.Spend the time and energy now to find someone who is good at what they do.
As Kiyosaki once said ….he is not the smartest man in tax or law, etc. but he loves to employ the smartest people in those areas. Doesn’t that make you the smartest by default as you know how to get the best out of other people and therefore your business.Hoe this helps.
Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert Einstein
Hi VioletaAs I don’t know your accounts this is just speculation, I think maybe you have the wrong accountant. We had an account up until last Sunday when we decided on our way home from the semiinar that he just didn’t fit out plan. So on Tuesday we found a new one, he has actually written a very good book about trusts which I have to say if mind blowing when you learn of the little tricks (thats really funny that I wrote that because his book is called trust magic) you can use.
Be sure you have the right players on your team that aren’t putting hurdles in your way.
Good Luck
Cheers
Leigh K[]Read, learn, grow but most of all just do it.
Leigh what is the title of the book and is it available through bookshops? thanks
We set up family trust on the advice of our accountant sfter a long discussion about where we were going and what we had in mind. He had no hesitation in strongly recommending that structure, even though at this stage we really had nothiong to put into it, but with plans to do stuff quickly it was better to have it set up so we could use it than have to undo it all and pay a whole lot of fees and taxes for nothing.Hey Fasta,
Check out http://www.gatherumgoss.com . It is for sale through there. (his book).Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinFastainvesta,
The book is called Trust Magic, it is not a published work so you wont find it in a book shop but the link that AD gave is to Dale’s web site and it can be purchased there.
I just finished reading it today and I have to say I was a little confused on some things and I know that I can comfortable go back to Dale and ask him to clarify those things, but the rest was mind blowing … Like renting your PPOR from your trust and getting a neg geared tax deduction … that’s not the mind blowing bit … this is, the trust can rent the house already fully furnished back too you and get a deduction and depreciation for the furniture … think about it!
There were so many “things” in this book it is so worth the read. Especially if you have read Wealth Guardian, Trust Magic goes the next level.
AD, thanks for the tip on Dale, I thought he was awesome I jsut wanted to cuddle him like a teddy bear.
Cheers
Leigh K[]Read, learn, grow but most of all just do it.
Leigh
I’m no accountant but if you sold your PPOR to your trust wouldn’t you have to pay stamp duty plus FBT if you decided to sell which ordinarily would be exempt?[?]Hi Violeta,
We also spoke to our accountant after APIM and he was against trusts. We spoke with another accountant who was helpful and wanted to know more about our long term goals. I suppose it’s all about trying to find a solution for the problem. Guess which accountant we’ll be seeing more of!
Go for it!Cheers
SpiderHi Yarra
I too am no accountant, but my understanding is that when you upgrade to your next PPOR you buy it through the Trust and you pay standard rate rent and then when it is time for you to upgrade again the other PPOR can remain in the Trust as an investment property which it always was, you were just the tenant.
As for selling your current PPOR into the trust yes there is all the normal selling costs including stamp duty as for FBT I don’t know the answer to that.
Hope this helps.
Cheers
Leigh K[]Read, learn, grow but most of all just do it.
Hi Leigh
I meant CGT but Im sure ATO would charge FBT if they could[]
YarraI think many accountants don’t understand investing. Definetly a trust is the way to go if you are going to buy a few properties. I did it for the tax savings-asset protection is just a bonus.
Also buying your PPOR in a trust is, maybe, not such a good idea. Initially you may be able to claim a loss (against other trust income), but as you will be required to pay market rents, it will eventually be cashflow +ve, and you would have to pay tax on your own rent. And what happens if you sell? CGT! Your PPOR is your only tax free asset.
Terryw
[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
Terry
My thoughts on this are not necessarily those of others but I think that by renting your PPOR from your Trust while it is neg is obviously a good idea, when it turns pos lets move on up rent to someone else pay tax on their money[
].But I think I opened a can of worms as this is only one thing that you can do with a Trust, as you would know Terry, I just wanted others that migh tbe thinking about a Trust to know that there is a whole new ball game happenin’ other there onthe Trust field.
Cheers
Leigh K[]Read, learn, grow but most of all just do it.
Hi Everyone,
Thank you for your wonderful responses.
So far, you have confirmed what I was suspecting and feeling in my guts, I need to look for advice elsewhere.
As this is what I was planning to do, with your help I feel a lot more confident in continuing down this path.
Can’t wait ’til Tuesday.
p.s. “TheEnjoLady” – Thanks for the Trust Magic book tip.
[
]Thanks guys – sent email to order today[][]Hi Violeta
If you need to ask specific questions of an accountant could I recommmend Dale Gatherum-Goss.
He’s based in Melbourne and is probably one of the very best accountants you’ll come across in Australia!!!
You can email him direct on
Take care
Dave []The ATO deems renting your own PPOR from your Trust as an “Aggressive Tax Minimisation Scheme”
Something they are considering closing the door on. Perhaps John can post more details on the article he showed me?Regards,
Peter.
Hi Dave and all others,
Thanks for the tip to speak with Dale.
I’ll keep you posted as to whether he agrees with my accountant (for my situation) or whether he thinks I will benefit from setting up a Trust.
I have emailed him today and hopefully get to make an appointment soon.
Cheers,
V.[]
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