Hi Guys;
Just wanted any feedback from any of you who have used the following structures and if they have caused you any grief with the ATO
."Equity Shift
This solution allows an individual to shift the equity as opposed to the asset from an unsafe environment to a much safer environment. Assume the person has a family home with significant equity (market value less debt) and wishes to purchase an investment property. A properly arranged loan will allow the investment property to be purchased in a property investor trust, while still allowing the individual to claim any negative gearing and have the debt which would have been allocated to the investment property to the home. The interest on the debt, if structured correctly, is still fully tax deductible as the purpose of the loan is for investment. This leaves no equity on the home and shifts the equity into the property investor trust where it is protected. No CGT or stamp duty on the assets.
Equity Bank Trust
This trust structure and relevant agreements was developed to assist clients with a more substantial asset base including properties. The EBT takes on the role of a lender and places a second mortgage on your assets thereby reducing to nil your equity. It is your equity which a law suit goes after, not the asset, so the protection of your equity (net wealth) is the primary consideration. No CGT or stamp duty on the assets is triggered. Depending on the second mortgage documentation, there may be a stamp duty on the mortgage document, which is a small percentage of what would be the case on the asset. "Thanks and look forward to your Feedback
Brian & CindyAsbestos Audits Queensland | Asbestos Audits Queensland
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The only problem I have is the line:
A properly arranged loan will allow the investment property to be purchased in a property investor trust, while still allowing the individual to claim any negative gearing
To do this, the trust would need to be a Hybrid Trust or a Unit Trust. It is getting harder and harder for Hybrid Trusts to borow, and the ATO have them on their radar. With a Unit Trust, the units would have to be owned by the individual to claim the negative gearing, so there is more asset protection than having the property in your own name.
No CGT or stamp duty on the assets.
How? There would be stamp duty on the purchase of the new property, I don't see how you would get away without paying stamp duty. There would also be CGT when you sell the investment property.Dan is bang on.
Firstly Stamp Duty will certainly be paid on the purchase and CGT on the assumption the asset had appreciated.
I cant think of 2 many lenders who would even touch a PIT or HDT in the current climate and the odd or two that do will not be attractive in terms, conditions or interest rates.
Richard Taylor | Australia's leading private lender
Fancy names for basic proceedures. Just go and see a good lawyer.
for the second, what you do is set up another trust and place a second mortgage over existing property. There are no stamp duty or CGT consequences as there is no transfer.
Incidently there was a Federal court case in the last few weeks favourable to hybrid trusts (forrester from memory).
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Qlds007 wrote:Dan is bang on.Firstly Stamp Duty will certainly be paid on the purchase and CGT on the assumption the asset had appreciated.
I cant think of 2 many lenders who would even touch a PIT or HDT in the current climate and the odd or two that do will not be attractive in terms, conditions or interest rates.
Richard last sept(2009) settled on a studio apt in melb which ad been purchased via a PIT with a copororate trusteeoff the plan back in 2007.
Had a good valuation so LVR was below 80%. Borrowed the money in my name with PIT giving property as security to CBA got rate and conditions.
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