We set up a company and family disc. trust in mid 90’s. In 97 severe health problems for me, cost me a business and financial ruin.
Thank goodness for family inheritance, enough to buy a house, but we were advised by financial advisor to put the house in a trust, with company as trustee.
Now, house is worth 3 times what we paid for it, we have been advised to put the house in our names, to avail ourselves of discounts etc as I am now on a pension. But to do this we would have to sell the house to ourselves, this will incur CGT plus sales tax. The company has no money. Our accountant shakes his head! We would need a loan to pay this. Pensioners are not given loans.
As the house is in a great area and suits my condition, we really don’t want to sell it and move on.
We have been advised to sell it, then close down trust and company which costs money every year.
At the moment we just sit here with it all costing us more money than it should, existing on a pension, going nowhere.
Any suggestions would be greatly appriciated.
Regards
AlanHi Alandon21452,
I am correct in thinking you are living in the house in question at the moment?????????
If so, you are not going to be subject to any CGT and the person who advised you to sell it to yourself/put it in a trust is a moron !!!!
Jo
Sounds like a big mess…
I would be talking to another accountant/solicitor or 3 to ensure that the course of action you about to undertake is definitely the best one for you, to avoid any costly repeats.
Should you need a loan, you may qualify for a Lo Doc equity loan of some description. There’s a plethora of them nowadays, from virtually all mainstream lenders: your suitablity would depend on a few things..
If you are retired, you might want to see if you qualify for a reverse mortage (a loan where the repayments are added to the mortgage and the loan repaid in full from the property when you die – St George has a reasonable one – but you will be gradually eroding the equity in your property as the years go by).Talk to a Mortgage broker to see you options loan-wise AFTER getting some more advice re best way for you to proceed. If you’re in Sydney you can call me direct on 041 2061218 or 02 95991144. Lots of other good brokers on this forum – best to use someone you can talk to face to face.
Good luck.
theloanarranger
Originally posted by Monopoly:I am correct in thinking you are living in the house in question at the moment?????????
If so, you are not going to be subject to any CGT and the person who advised you to sell it to yourself/put it in a trust is a moron !!!!
Jo
Not sure about your advice. If you live in your OWN home then your PPOR would be exempt. But as the Trust is a separate legal entity bound by its Trust deed, can’t see how it could be OWNED by the occupiers, and therefore exempt.
As to the other part, yeah a no brainer, a complete misuse of a Trust.
Alan
Instead of being up for all the transaction costs (CGT for the trust and therefore YOU), stamp duty on buying etc. etc., is there anyway that you can make use of the equity, and invest the money in such a way that it returns you $$ per week, and makes you not so reliant on a pension?
You could also ‘rent’ the house from the trust – thus creating more income for it when it comes to servicing loans. Lo Doc or No Doc loans should be possible for your company as trustee……
Cheers
MelAgree with melbar.
Also, the cost of transfering the property from the trust to you will incur in CGT, stamp duty, solicitor fees etc. If the house has gone up in value 3fold, CGT alone will be a sizable ammount.I would work out exactly how much is the cost of the whole deal, and how much will you save in maintaining the company and trust.
Furthermore, since the trustee that holds the house is the company I think that you can sack the trustee and fold the trust, but you must confirm this with an expert.
You will then have to pay accountant for only the company. Find an accountant willing to do the company returns on the cheap since there are nil transactions and almost no work. The difference between one accountant and another can be as much as $1000 dollars.
If your house is 300,000 or more, I think that the cost of transfering it to you will pay for 50 years of tax returns.
Consult a few different accountants, you already suffered because of poor advice. It is time that you have some peace from worries.
May God prosper you always.[biggrin]
MarcHi There,
I would suggest getting at least two or three more independant opinions of advice and look for a specialist entity and taxation specialist rather than an accountant (Accountants generally -although not all – tend to push the managed funds and super funds).
Food for thought anyway! [biggrin]
Cheers
KiwiThank you all for your advice, we will investigate the options.
It is difficult without funds behind you, to change mistakes now, because the rules have been changed. I will endeavour to sort it out before property prices get too much higher.
Regards
Alan
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