All Topics / Legal & Accounting / Family Trust query

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  • Profile photo of JD86JD86
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    @jd86
    Join Date: 2009
    Post Count: 52
    November 26, 2009 - 12:14 am

    Hi guys

    I have recently the chapter in steves new book about family trusts. how they are used as asset protection and how you can borrow more because you are guarantor for the loans for the trust so you can borrow more

    this sounds great, and is an avenue id like to pursue

    however, i am building a house and the mortgage is in my name, eventually this house will be an IP but for a year or so will be my PPOR

    so i wont be able to guarantor much because of my high personal debt

    can i transfer my PPOR (soon to be IP) into a trusts name?

    also, how do i go about setting up a family trust? speak to my accountant i imagine? anyone know what costs are involved?

    i have just recently read about trusts so if any aspects iv said are wrong please correct me

    thanks

    Profile photo of Dan42Dan42
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    @dan42
    Join Date: 2008
    Post Count: 619
    November 26, 2009 - 2:56 am

    Transfering from your name to a family trust may trigger stamp duty.

    Talk to your accountant about setting up a family trust, and the costs will be somewhere from $250 to $500, depending on their margins!

    Profile photo of miikemiike
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    @miike
    Join Date: 2008
    Post Count: 111
    November 26, 2009 - 4:59 am

    An accountant can help you discuss the movement of the property as per ATO regulations, however a lawyer is the appropriate person to speak to regarding asset protection.

    Ensure the structure matches your aim, be it asset protection or reduction of tax.

    Cheers,
    Miike

    Profile photo of JD86JD86
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    @jd86
    Join Date: 2009
    Post Count: 52
    November 26, 2009 - 5:27 am

    thanks guys

    so to transfer to a trust would definately incur stamp duty? anyone know a way around this?

    is there various types of trusts? anyone have any suggestions on what the best are?

    i have been informed that it may be mortgage fraud to have numerous trusts and not inform the back that i am guarantor of other trusts

    is this correct?

    thanks guys

    Profile photo of miikemiike
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    @miike
    Join Date: 2008
    Post Count: 111
    November 26, 2009 - 5:31 am

    There are plenty of different structures available.

    Either way, when you transfer land/property from the name of a person into another company or person. You are affectively changing ownership of the title, thus stamp duty will apply.

    Please seek further information from a licensed professional that specializes in this. http://www.chan-naylor.com.au may be a good place to start.

    Cheers,
    Michael

    Profile photo of PI101PI101
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    @pi101
    Join Date: 2009
    Post Count: 9
    November 29, 2009 - 11:37 am

    From what I understand from my Solicitor – Trusts can be set up in so many ways – with very specific rules that suit you – but at the end of the day the ATo rules apply – so yes I believe that you will be up for Stamp duty. You really need to speak to someone who sets them up for property protection for a living – set it up wrong and it might cost you a lot. Good Luck

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    December 3, 2009 - 10:45 am

    There are stamp duty exemptions for transfering from trusts to individuals – but not sure of the other way around. And they wouldn't apply in most situations relevant to investments. eg trust set up to own property for a minor and then the property transferred to the individual when they reach 18.

    PI the recent case of Bamford has shown that trust deeds overrule the ATO when determining what is income so they don't always win, though they are appealing this in the High Court so they may still win. And the stamp duty is not a administered by the ATO, but by each state through the Office of State REvenue (in NSW).

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

    Profile photo of mpjtmpjt
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    @mpjt
    Join Date: 2009
    Post Count: 7
    December 8, 2009 - 7:19 am

    Hi everyone,

    I too am thinking about converting my PPOR to an IP and buying a new PPOR via some sort of family trust. Could anyone
    advise me on someone that they know of in the ACT that does this sort of thing, either an accountant or mortgage broker or
    both?. I am a novice when it when it comes to this side of finance and need someone that i can trust.

    thanks
    Mick

    Profile photo of TerrywTerryw
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    @terryw
    Join Date: 2001
    Post Count: 16,213
    December 9, 2009 - 12:43 pm

    You should get some tax advice on trusts before you make the decision. The mortgage broker can advise on the loan side of things but not tax. You really should look at the legal side too – but it all costs. There are many things to consider such as state revenue issues such as land tax, income tax, CGT, legal responsbilites, corporations law, trust law and loan issues.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    http://www.Structuring.com.au
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au

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