OK, I have spent the last 4 weeks reading heavily into trusts, and am about to take the plunge. However still not sure how to go about selling this IP
Have a property on the market, had a few offers but not happy yet.
Owe $80K, selling for $165K. IP is owned by me.
Once sold, I figure I owe CGT based on the following sums
$85K Cap Gain (165-80)
50% discount for owned more than 2 years. Tax on $42K = approx $20K. (based on 47% marginal rate) Leaves $22k + $42K = $64K Capital Gain after paying tax (which apparently can be deferred for some time)If I setup a trust, and do a transfer of the property to the trust ($4500 for Stamp Duty and $1500 for trust setup), then sell the property from the trust, does it work as per below, or is the transfer considered a sale, and therefor, I pay the Capital Gain on selling the property to the trust, (which obviously makes it pointless selling to trust, me as guarantee)
1) Setup trust professionally ($1500)
2) Transfer property to trust ($4500 stamp duty and contingency)
3) Sell the property from under the trust
4) Have wife as beneficiary of trust, whom will earn zero $$$ next tax year as giving birth to our first child next weekOf course I could also make the new child a beneficary
Any suggestions
If you sell to the Trust you must pay stamp duty..
WHY sell to Trust and then sell again??
No need to make the child a beneficiary depending on the trust as it will automtically become one..also you will need the child signature for any loans through the trust once 18..
Are you talking HDT ?
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorSelling your IP to the trust is like seling it to someone else. There will be CGT and stamp duty involved, then to sell it again and incur these costs again.
If you want to sell the IP, sell it in your name and then set up a structure before you invest in your next deal. CGT is calculated in your next tax return.
This is why structuring before you invest in vital. The correct structure can cost initally, but save thousands in the future.
CATA
Asset Protection Specialist
[email protected]Damn, i figured this would be the case. I wish I knew of this website before i bought my properties. So it looks like there is now no way to minimise the $20k im paying in CGT. Wont make that mistake again!!
Cata, whom do you work for, do you have a website?
Redwing – HDT?? Acronym for?
(And I thought there was a lot of 3 letter acronyms in I.T..i think property takes the cake [specs]HDT- Hybrid Discretionary Trust
I work for myself and no I don’t have a website. E-mail me if you want to chat.
CATA
Asset Protection Specialist
[email protected]Originally posted by stuck-at-two:Damn, i figured this would be the case. I wish I knew of this website before i bought my properties. So it looks like there is now no way to minimise the $20k im paying in CGT. Wont make that mistake again!!
Cata, whom do you work for, do you have a website?
Redwing – HDT?? Acronym for?
(And I thought there was a lot of 3 letter acronyms in I.T..i think property takes the cake [specs]Sell on the 1st July [biggrin]
At least you now know about various structures that are avialable and can acquire new IP’s through the correct structure to suit your strategy..
From Memory even Steve uses a Family Trust..
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorStuck at two
Think some of your figures are slightly incorrect including both the GCT and cost of setting up a new Trust structure.
Also Redwing don’t want to disagree but Benficiaries whether they are over the age of 18 or not are not required to consent to any new loan. Only the Trustees guarantee is required.
Richard Taylor
Residential & Commercial Finance Broker
**Lodoc Commercial loans from 7.19%**
Licensed Financial Planner
http://www.yourstatefinance.com
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Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Your capital gains wouldn’t be what you sell for less what you owe rather what you sell for less purchase price (and of course all the other incidentals) so your tax bill might not be as high as you think.
Not sure if this is right but this is my understand of selling to a trust in your case. Selling to a trust would be purely on paper so I imagine that you would have to sell at market rate, eg 165k and pay capital gains AND stamp duty on this, then you would sell to purchaser at around the same price, unfortunately the benifit is lost as your purchase price and sell price in this entitiy is $165k leaving with a gain of $0 and therefore nothing to distribute to the benificiaries.
Regarding the benificiaries having to sign a consent if they are over 18. Depending on what is written in the trust deed this may actually be so. I’ve been caught out so always good to know what the deed says and change if required
Not sure if this is right but this is my understand of selling to a trust in your case. Selling to a trust would be purely on paper so I imagine that you would have to sell at market rate, eg 165k and pay capital gains AND stamp duty on this, then you would sell to purchaser at around the same price, unfortunately the benifit is lost as your purchase price and sell price in this entitiy is $165k leaving with a gain of $0 and therefore nothing to distribute to the benificiaries.
The sale to a Trust or a Pty Ltd Company is exactly the same as a normal on market transaction. There is no purely on paper about it. Admitedly there might not be a full Sale Contract but a Standard Form 1 Transfer is required and the OSR will use a letter from a local Real Estate agent to assess the Duty charged.
Then I cannot see why a second sale is required? The property once sold is held in the name of the Trust and there is no need to sell it to the purchaser (who is presumably a Trustee / Beneficiary).
Finally in 20 years of dealing with Trusts i have never seen a Deed that requires the Beneficiaries to stand as Guarantor in the event of the Trust making application for borrowing.
Can you image the Bank trying to send Guarantee documents to long lost Uncle Joe in Brazil you was one of the named Beneficiaries.
All i would say is you are after advice get the right advice before you act on such a transaction it could be an expense mistake if you get it wrong.
Richard Taylor
Residential & Commercial Finance Broker
**Lodoc Commercial loans from 7.19%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Richard..I believe some Banks may require the Trustee to be gaurantor though in the case of a HDT (maybe other forms of Trusts..I’m not sure) Via a Solicitors Certificate..in the case of a Trustee being a company recently established??
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorBarry
My point exactly. Trustees will certainly be required to offer a Guarantee irrespective of what type of Trust but NOT the beneficiaries.
Richard Taylor
Residential & Commercial Finance Broker
**Lodoc Commercial loans from 7.19%**
Licensed Financial Planner
http://www.yourstatefinance.com
[email protected]
Ph: 07-3720 1888Richard Taylor | Australia's leading private lender
Originally posted by Qlds007:Trustees will certainly be required to offer a Guarantee irrespective of what type of Trust but NOT the beneficiaries.
Or the director/s of a corporate trustee.
CATA
Asset Protection Specialist
[email protected]
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