Hello Everyone,
Does anyone know about the implications of having more than one property in a trust structure in relation to having to pay more stamp duty than normal?
I was speaking to my accountant and he mentioned that some of his clients are starting to set up a new trust structure for each property they purchase because of the rising amount of stamp duty that must be paid on multiple dwellings in the same trust. My structure is using a discretionary trust. He is going to do some more research for me about this but thought that maybe one of you “guru’s” might know the answer.
I would greatly appreciate any info you can provide for me.
Thanks heaps
KelHi Kel,
Is your accountant talking stamp duty or land tax?
Stamp duty is levied on the purchasing entity at time of purchase and I cannot see how having a new trust would reduce the SD bill. Land tax, on the other hand, is determined by the value of the landholdings and could be reduced or offset with different ownership entities.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958I think Derek has it right here. Stamp duty should not change in any structure, as it is worked out on the purchase price.
CATA
Asset Protection Specialist
[email protected]Yes it has to be land tax he is talking about.
The structure he might be referring to is a Property Investor Trust which advocates a separate trust for each property in NSW to make use of the land tax threshold.
I would recommend lots of research as there is no indication that the OSR will continue to allow this sort of trust to be exempt from the threshold.
It is basically a HDT with a unit trust attached.
http://www.chrisbatten.com.au/ has lots of interesting info on trusts on his site.
cheers
anihttp://www.tradeoff.com.au
the new card for investorsOriginally posted by Trade Off:The structure he might be referring to is a Property Investor Trust which advocates a separate trust for each property in NSW to make use of the land tax threshold.
I would recommend lots of research as there is no indication that the OSR will continue to allow this sort of trust to be exempt from the threshold.
I think the OSR has already put in place measures to stop this structure’s effectiveness for land tax.
CATA
Asset Protection Specialist
[email protected]If in fact it is land tax your account is referring to then you will need to compare tax savings with trust establishment and compliance costs.
While tax savings and/or redirection can be achieved through trusts the bigger issue revolves around asset protection.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113Thanks guys, some great information here. I really appreciate it.
Any of you want to be my accountant? Just kidding.I presume from your comments that land tax is not only calculated on the amount of land one entity holds but the amount of different titles the entity posseses? Is this correct?
Cheers
KelHi Kel,
I cannot speak for the others but I am not an accountant (I don’t think Ani is either – she is ‘just’ an experienced investor)
Different states have different calculation rates and thresholds for land tax and NT is still land tax exempt. I suggest that you log onto the OSR website for the state/s in which you hold property and that will give you an idea of your likely bill.
Just remember land tax is determined by the total value of unimproved land of all land holdings held by each entity. Land tax is not calculated on the number of properties.
Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958
Skype – derekjones2113[
Hello Krs,I have read a bit about truct structures and I know that different forms of trusts have far reaching tax implications. For instance in NSW it is not adviseable to set up a discetionary trust structure to purchase property as that is treated as a special entity and a whole range of tax implications will apply to your property purchase and investment cost thousands of dollars on the long run, and if you end up with a substantial portfolio, it could be hundreds of thousands opver the property life. The main implication is that the trust will not have a tax free threshold. There are accountancy companies that specialise in this area and it can be really complex so advice is required before setting up structures. Trusts can be taylored to suit property investing without requiring tax rulings. caution is required in this area.
Happy investing
quote]Originally posted by krs:
Hello Everyone,
Does anyone know about the implications of having more than one property in a trust structure in relation to having to pay more stamp duty than normal?
I was speaking to my accountant and he mentioned that some of his clients are starting to set up a new trust structure for each property they purchase because of the rising amount of stamp duty that must be paid on multiple dwellings in the same trust. My structure is using a discretionary trust. He is going to do some more research for me about this but thought that maybe one of you “guru’s” might know the answer.
I would greatly appreciate any info you can provide for me.
Thanks heaps
Kel
[/quote][strum]Thanks guys, much appreciated. Back to the accountant for me it seems.
Kel
It is probably Lnad tax being referred to.
But I remember reading that in Victoria, things are slightly different to other states. If purchasing multiple properties next to each other the OSR, for stamp duty purposes, pools the values of the combined properties making much more stamp duty payable.
Terryw
Discover Home Loans
Parramatta
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
What happens if you still have your name on a property from a past relationship that you walked away from? The ex lives in that house, but it was bought in both our names. Will this affect land tax? What can be done about it?
I currently own my home in my name, half own another property with current husband and my name is still on the property that my ex still lives in. So theoretically I own 1 & part own 2 properties. How do you know how much land tax is owing if any? And what should I do about a property I walked away from? Any suggestions???
Quote:Originally posted by brandmark:[
For instance in NSW it is not adviseable to set up a discetionary trust structure to purchase property as that is treated as a special entity and a whole range of tax implications will apply to your property purchase and investment cost thousands of dollars on the long run, and if you end up with a substantial portfolio, it could be hundreds of thousands opver the property life. The main implication is that the trust will not have a tax free threshold. .Quote:The Unit trusts and therefor Hybrid trusts are also now special trusts. The Discretionary trusts will give much better asset protection than a Unit trust. A trust only pays tax on any income still in the trust at June 30(which is at the top rate) but any distributions are taxed at the beneficiaries marginal tax rate.I disagree that a discretionary trust is the wrong entity for NSW, as everyone’s personal position is different.
CATA
Asset Protection Specialist
[email protected]Hey, in terms of cost for setup (rounded say to the nearest $100)
does anyone know what is the cost for setting up
1) Descretionary Trust
2) Unit trust
3) Hybrid trust
4) Bare TrustAlso lead time. eg: Can these be established within a week? Actually and whilst were at it, can anyone put down in say 10 point form, the order in which a trust is setup.
Just reading a few books now in relation to the differences betwene them all, but wondering on costs
hi Stuck
from
1) $175 http://www.cleardocs.com.au
or $275 at lawcentral.unit trusts are a bit more. Bare trusts are available on Law Central, but you could easily set one up yourself.
Hybrids are not available on these sites. Set up is about $1200
Online they can be estalished in 5 min.
Please join lawcentral and go thru the process of setting up a trust – no cost unless you want to proceed to the end.
BUT, if you are unsure, then you should probably go through an accountant to set up your trust initially. costs about $1000+
Process:
1) get the trust deed online or from accountant
2) sign it, with witnesses
3) get ABN, TFN
4) Pay stamp duty ($200 in NSW, Nil in QLD)
5) start using it!Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.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
wow, awesome…cheap and quick..(once you understand the legailities and tax implications behind each, of course)
Thanks !!!!
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