My dream is to become a full time property investor and to get out of full time employment.
Could somebody please point me in the right direction as to what is the best structure to own investment properties eg. trusts or companies, or a combination of both.
Also within these structures is there any way to protect the family home? I am currently a police officer and there is always the possibility of civil litigation.
Who sets these structres up and what would a rough idea as to the cost associated be? I’m currently living in the Latrobe Valley, Victoria.
[cap]
Thanks.Bruce M.
Hi Bruce
Recommended structure would be a Company and Hybrid Trust. This can be set up by an Accountant or Solicitor at a cost of about $2200.00 – $2700
If your family home is in your name, you would have to transfer it into the trust which would have you paying stamp duty. Best to discuss this aspect with a Solicitor, you could just transfer it as a gift to your wife (if applicable).
Gatherum Goss & Associates in Kilsyth are quite the gurus at setting up the best structures.
Cheers BJ
You may not have to transfer your own home to protect it, there are other ways such as mortgaging it. Your accountant shoukd be able to fill you in.
Terryw
Discover Home Loans
Parramatta
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As Terry has said there are mush better ways to protect your PPOR, but a correct structure would be difficult to comment on without some details on what you have now and what type of investments you are going to buy.
Hybrid trusts are good, but I believe that they are over used. If you are -ve gear then probably. Other than that probably not.
E-mail me if you want to talk about possible structures.
BJ
You can not transfer your house to a trust or your partner. It must be sold, all the relevant taxes would be payable e.g. CGT, stamp duty, legals ect.Hope this helps.
CATA
Asset Protection Specialist
[email protected]Wealth,
You can certainly transfer property in-specie to a trust but the market value substitution rules will come into play.
If the property is your main residence, and has always been your main residence, then CGT is not an issue as you will obtain the main residence exemption.
Depending on the State you live in will determine whether stamp duty is payable. It is my understanding that in Victoria property can be transferred between spouses for “natural love and affection” without incurring stamp duty. You would need to consult a solicitor to determine this. In NSW however, stamp duty will be payable on the transfer of your holding to your spouse. The NSW government doesn’t believe in “natural love and affection” apparently.
Other strategies that may be appropriate to consider include :
1. establishing a trust with a secured mortgage taken out over the property so that a secured loan is payable to the trust;
2. long term rental agreement e.g. 300 year lease option.
3. a call option being placed over the property (note that this doesn’t protect any increases in the market value of the property)
4. a combination of these strategies.Transferring the property is usually considered to be the most effective but also the most expensive. Worth discussing with your accountant and solicitor.
In Victoria at least you can transfer your pricipal place of residence to your spouse without incurring stamp duty. I know because good friends of mine have just done exactly this to separate their business dealings from their home.
Cheers BJ
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