PPOR in Trust question

Hi Moyjos,

  I know that if you transferred the property into a trust name (from you personally) you would incur the normal stamp duty on the value of the property…(same as if your selling it)

  In a company name, Im sure the stamp duty would be claimable through the business, but I dont think it is through a trust (??).
Best advice to give you is find an accountant that deals with trusts & companies. I found a good one a while back & has been great for setup & advice…

cheers, Andy
 

cheers

If you sell your PPOR to a trust, depending on the sort of trust you will get the 50% CGT discount provided you own the property for more than 12 months.  If you sell your PPOR to a company then there is no 50% discount on the eventual sale.  As others have said, you will also have to pay stamp duty on the transfer to your chosen entity.

A company can certainly pay your salary.  I'm unsure whether a trust can, other than via distributions.  You would have to get financial advice on that one.

We have a discretionary trust and a company as trustee for a separate trust.  The company does property development and our salary is paid from the profits.  Our discretionary family trust is for buy and hold property.  The only property we have left in the family trust is the place we live in.  Legally it is not our PPOR.  We rent it from the trust at market rent.  Normally I wouldn't recommend this, mainly because of the CGT issue.

We, however did this for a number of reasons:

1.  Being able to claim the interest on the loan as an expense.  The "losses" are carried over by the trust until the trust makes a profit.  We also sharetrade in the trust and have sold off a few properties which we have been able to offset against the losses. 

2. The place we live in is on 50 acres. On a PPOR you only get the CGT discount on the house and surrounding 2 acres (or hectares, I'm not sure which).  That means that on the eventual sale we will have to pay some CGT anyway.

3. Asset protection.

You will need to get proper financial advice to see if what you propose will benefit you.  We incur substantial "losses" by renting this property and we are far more financially better off than if we owned this place as our PPOR.

Cheers

K