All Topics / Help Needed! / How to sell to Trust

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  • Profile photo of soloinvestorsoloinvestor
    Participant
    @soloinvestor
    Join Date: 2006
    Post Count: 39

    I own an IP (for 2years) in my own name.  I want to sell but will incur CGT.  (Bought for $206,000, will sell for around $350,000).  Would it be worth selling it to my trust and paying Stamp Duty, and then the trust selling it and distributing the income, or not?

    Profile photo of Luke TaylorLuke Taylor
    Participant
    @world-changer
    Join Date: 2005
    Post Count: 415

    Mate ,
    another option may be just mortgage it out to the max ,thus reducing the risk of someone sueing you for the equity(low equity makes it a waste of time to take legal action agaainst it) then continue regularly drawing down on the equity keeeping it low)
    Then use the equity drawn from the property to start a fresh buying in yr trust,thus getting the best of both worlds.

    Luke Taylor | Hope Property Investing
    http://hopepropertyinvesting.com
    Email Me

    Property Support,Strategist and Buyers Agent

    Profile photo of Richard TaylorRichard Taylor
    Participant
    @qlds007
    Join Date: 2003
    Post Count: 12,024

    Selling an IP into Trust will trigger both a stamp duty and CGT issue.

    Unless the raised funds where to be used for non tax deductible purposes it is probably not worth it on your figures. (assume you dont have a PPOR with a mortgage secured against it).

    As WC has mentioned there are several ways to reduce your liability yet still utilise the available equity.

    Richard Taylor | Australia's leading private lender

    Profile photo of LinarLinar
    Member
    @linar
    Join Date: 2004
    Post Count: 567

    Hi Soloinvestor

    If you sell it full stop you will have to pay CGT.  It doesn't matter whether you sell it to your trust or to your mother or to a stranger.  Even if you sell it for less than it is worth the ATO will make you pay CGT on the market value.

    Just buy future properties in your trust so that when you sell them you can distribute the profits.

    Cheers

    K

    Profile photo of Gav HGav H
    Member
    @gav-h
    Join Date: 2008
    Post Count: 19

    I am in a similar situation. 2 IP's and have recently established a trust. If the reason you want the IP's in your trust is soley asset protection then drawing down the equity will be the cheapest and most effective way to do it.

    Even if you just set up a line of credit against the equity and not use it 'til you need it. Might cost you $20 amonth but definately cheaper then selling.

    The only real issue is that you wont be able to distribe any funds from the property (capital gains) if you choose to sell later or if they are cash positive and producing a significant rental income; but I'm assuming, as they are IP's, you wont be considering that any time soon.

    Just make sure anything you do from now on is within the trust.

    Congrats on the first two,

    Gav H.

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