Buying under Property Investor TRUST: Much Harder to get Finance ?

Hi all,

I am still learning so someone like Richard will be able to confirm or deny the following.  My understanding of one of the differences between the Hybrid Trust and a Discretionary Trust is the way Negatively Geared properties are handled.

A Hybrid allows you to claim the tax benefits on the rental losses made from an IP each year.  The Discretionary Trust losses can only be claimed once the IP is sold.

Cheers
Ben

Hello;
Have just set up family trust at $900 with our personal names as Trustees extra cost may be from setting up company as well to be trustee another $900-$1100. Our accountant was not friendly on hybrid trusts when I brought it up. We run consulting business where PI costs are large per year and chance of law suit a reality with law suit possible greater than PI available (ours through Lloyds of London because since HIH went belly can't get it here ) – but most people don't -so be sure you really need these added layers of protection.
Plan to purchase properties with large deposits to make cash flow positive in as short as time as possible or purchase further out with added risk of vacancy.

Albert 

I think we all accept that many inexperienced Brokers or Bankers have absolutely NO idea when it comes to Trust structures and the reason why they are used however think you will also find many more experienced lenders are moving away from lending where certain Trusts  are involved directly as a result of ATO rulings.

I talk with Senior credit guys daily and more and more are being swayed by legal opinion.

Hi all,

I have a family trust with my company being trustee along with myself and spouse.
The trust owns my business and I have just bought  my first investment property under the trust . I have obtanied loan from CBA and ING (MYRATE) However,my spouse and myself have sign as co borrowers? Does this not defeat the purpose of the trust. If we have to be guarantors My current house will be on the line. Can I refuse this? They also wanted a list of all my assets and liabilities. They should only have hold on my investment property and nothing else.
 

Hi

Interesting topic, as I am working on finding an accountant to help me with a DT with Corporate Trustee.

Can someone advise on this…

If my partner and I set up a DT with a company as the Trustee, and us as Directors in the company, then when it comes to getting the banks to lend to the company, can we still borrow up to 90% LVR? Or are we limited to 80%LVR? Assuming we give personal guarantees.

Or is having a company as a Trustee an overkill, and it is good enough to simply remove the company and have us as the trustees of the DT, so that we can continue to access up to 90% LVR with lenders. Our investing strategy includes borrowing up to 90% LVR to invest, and putting excess capital gains and income into the company to be taxed at Corporate tax rates instead of the personal marginal rates.

Regards
Daniel

Hi, Richard

Thanks for the quick response. I am asking because I am going off to meet an accountant tomorrow, so I wanted to be as sure as I possibly can.

My other question would be:

If we proceed with a DT with Corporate trustee, are Full doc loans still accessible to us? Or do we have to resort to Lodoc loans and their higher interest rates to get the type of LVR that we want?

Clearly, it depends on every lender, but generally speaking?

Regards
Daniel

I have spent considerable time investigating the chan naylor property trust with the tax department, scams dept ect etc.
A FAIRLY big accountant warned that the tax dept were out to shut down the chan naylor trusts as they were breaching a few
"rules"
After many calls emails ect(to the ato asic scams ect)a they pretty much came back and said it looked ok. It hasnt been flagged as a dodgy scam or the like
and if i really was worried a private ruling would need to be served. I know personally a few people who haved purchased the trust so i was going to do a bit of homework before i did. The 3k price is becuase they have trademarked the Hybrid/discretionary advantaged mixed in. Somewhat over priced if you were using it for negitivly geared the advantages are there. especially if you wanted to transfer assets later on!(children etc.)

I will be a bit nervous spending 3k on a sort of A$500 document however it will be worth it in a few years.
The saying short term pain-long time pleasure…..

Info previous to this is very informative..

Matt