Wondering if anyone can share their experience in regards to the pros & cons of purchasing property in a company name or trust name. I’m thinking for tax reasons it would be more beneficial to purchase property in a trust name? I’m looking at trying something different such as building 2 town houses.
Nicster
In my opinion Discretionary trusts are much more suited to owning property (and other assets) because of the asset protection issues and the great flexibility in profit distribution (=tax minimisation).
Companies do not get the 50% CGT reduction and profits must be distributed to shareholders in accordance with ownership %.
Terryw
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I agree with Terry.
But I definetly recommend to talk to an accountant.
Mine gave me one page of advantages and one of disadvantages.
The main advantages are the possibility of income streaming to stay under the 30% tax and the asset protection.
The main disadvantages are the setting up and running costs as well as the inability to forward losses to the benificiaries. You can only carry them forward to claim against future income.
Also make sure that the trust has been created prior to making an offer on a property, otherwise and/or nominee cannot be used.
My recommendation is further that you make the loan in the trust name and you are only the guarantor. I have not quite gotten the reason behind it, but follow Steve’s advise.
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