Looking for some advice on pros and cons of buying a house to be used as our PPOR in the name of our trustee company.
We currently have nine postive geared investment properties under this trustee company, however, we do not own our own home as yet. We are now looking to purchase a house as our PPOR and are tossing up whether to buy it in our personal names or under our company trust structure. We know that we will be liable for land tax and CGT if we purchase our PPOR in this structure. However, we can rent the property from the trust and claim interest payments and outgoings etc.
Can anybody give us help with the pros and cons of each scenario.
Confused.
This is a complex one and hopefully there are a few accountant who might have a go at it for you with some actual numbers.
The structure will obviously provide significant assest protection benefits.
However, your PPOR is CGT free. I would be interested to see what arguments come forward to support buying in the structure.
Not paying CGT could represent a massive windfall upon the sale of this proposed PPOR.
Good Luck
This topic comes up every now and again, so do a search and you may find some previous posts.
It may not be a good idea buying in a trust unless the home will be your temporary residence. As Don and Liz said, giving up the CGT exemption could be very costly.
The short term gains could be small when compared to this.
Terryw
Discover Home Loans
North Sydney
[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
I have made an enquiry with an accountant in reagrd to renting off your own trust and claiming interest etc. and have been advised that you can’t do this if you are associated in any way with the trust.
Also advised that the best way to protect PPOR is with debt – if the debt is used for purchases of other property then can be claimed against the IP legally. But if someong were wanting to ‘sue’ you then it would appear that there were a high mortgage on your property so no value there.
This is a very simple explanation of what I was informed. Probably best to get advice from an accountant that is experienced with property investing.
Hope it helps
The ATO put out a ruling a few years ago about buying a home thru a unit trust, see:
TR 2002-18 – “Income tax: home loan unit trust arrangement”
Available from:
http://law.ato.gov.au/pdf/tr02-018.pdfMost people would want to use some sort of hybrid unit trust to enable negative gearing benefits.
Terryw
Discover Home Loans
North Sydney
[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
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