as for land tax, u can have multiple trusts and just put ur properties accordingly so that it doesn’t goes above the value that land tax would then applies. It’s calculated by the cumulative value of the Ips i believe.
Kev
oh btw, here is the link to Dale’s webpage
click to shopping and there’s a link to his trust magic book purchase.
Kev
Melbear – music cd’s. chocolate bars etc [?]
Sounds like a Christmas shopping list!
Guess, it’s expensive, it’s effective..thats why the rich use it!The idea of your PPOR being able to be an IP appeals to me, another idea is the old one of rent or buy therefore PPOR becomes 3rd IP.
Wish i knew about trusts earlier, would be easier, still it’s all a learning curve.
For those out there that have trusts or an idea.. what would be the cost of incorporating the properties into a trust? or setting one up ? or best to do as ENJOLADY has done and incorporate into the trust from ‘now’ on in ??
Not asking for detailed accounts just an idea of cost’s if possible, thanks for the help[^]
REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
Another reason for not putting your PPoR into a trust is as others have said – Trusts attract Land Tax from $1,- this will include your PPoR. In NSW, as an individual, your PPoR is exempt from Land Tax (unless land is valued over $1.68m)and you only pay Land Tax on the IP’s
Also, from an accounting point of view (unless you were actually going to turn your PPoR into an IP) I suppose it would be better tax wise to keep your investments seperated from your domestic home expenditure, but I could stand to be corrected on this aspect.
Looking at a link posted for chrisbatten.com.au he recommends ‘not’ putting your PPOR into a trust and recommends discetionary trust for IPs, however, i’m thinking with the benefits of the trust it may still be a good idea especially if you ‘trade up’ and convert your PPOR into an IP in a year or two, next PPOR same..
Also with your PPOR as an IP the benefits of renovations carried out etc become better financially wouldn’t they ??
spoke to my friends sister (an accountant) who said costs to set up the trust would be approx $800-900, but she pointed out as discussed here that we would essentially have to sell the properties to the trust thereby incurring stamp duties etc.. she offered a free 1/2 hr session to make sure i make the right decission before moving on.
just thinking, if we sold to the trust, we would have to refinance wouldn’t we ?? with the trust taking on the loans ( and the rates up a bit now)
on the plus side though.. would refinancing back to a 25-30yr loan on the properties then actually ‘free’ up the equity in the properties into ca$h ???
Just thinking aloud here and probally getting carried away.. definetly have to speak to accountant and read an informative book
“wealth guardian” or “trust magic”REDWING
“The man that thinks at 5o as he did when he was 20 has wasted 30 years of his life”
A couple of others things to think about when moving iP’s into trusts is that when applying for finance banks tend to treat the trust just like a person ie. they will only use 30% of the trust income (rent) to qualify for finance. So you may have to go guarantor for the trust in which case attracts an extra $300 to sign the extra paper work in the presence of a solicitor.
I don’t believe it would be benefical to use you personal income to go guarantor for a trust as it may restrict future opportunities.
Personally I plan on waiting until my ip’s are paid off or nearly paid off until I put them into a company/trust structure. My plan is to put high profit earning ip’s into the trust first and keep property with the most deductions in my name. The first house to go will be my ppor as I wont pay CGT.
Just some ideas
Mick INC
PS. I also found that my B(W)ank wouldn’t offer the basic loan package to the trust so you may have to pay slightly higher int rate.
Michael, I have a different view to you in some aspects:
‘A couple of others things to think about when moving iP’s into trusts is that when applying for finance banks tend to treat the trust just like a person ie. they will only use 30% of the trust income (rent) to qualify for finance.’My bank calculated at 70%, the same as an individual.
‘I don’t believe it would be benefical to use you personal income to go guarantor for a trust as it may restrict future opportunities.’
How else is the trust going to get started in investing?
It doesn’t have an income until it has income-producing assets. Your future investing would be through the trust.‘Personally I plan on waiting until my ip’s are paid off or nearly paid off until I put them into a company/trust structure.’
Doing this surely you miss on all the legitimate tas deductions for the trust on the way, and there are lots that are not available to you as an individual. Plus you pay stamp duty transferring them into the trust later. New IP’s, and other investments, would be bought by the trust.
‘My plan is to put high profit earning ip’s into the trust first and keep property with the most deductions in my name. The first house to go will be my ppor as I wont pay CGT.’
You may be better off using a hydrid discretionary trust, since you can still obtain the benefits (?!) of negative gearing.
‘Just some ideas
Mick INC
PS. I also found that my B(W)ank wouldn’t offer the basic loan package to the trust so you may have to pay slightly higher int rate.
‘
My bank included everything into my Professional’s Package which had existing IP loans – no difference.
TerryTerence McMahon
HomeWin
Finance
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