Hello All,
I'm pretty new to the property market and recently brought my first property (in my own name) over 18 months ago. About 2 months ago I had it valued and confirm by the bank. My question is, how would I got about setting up a Trust or Company to purchase my next property and use the equity that I now have? Second question is, if I decide to go with either a Trust or Company can I transfer everything over that is in my own name?
I hope this all makes sense and somebody can help me out or at least point me in the right direction.
Regards,
Matt
Matt,
Welcome to the forums.
Have a look at previous posts on this – there is a lot of information already out there. Search box is at https://www.propertyinvesting.com/search, try entering “setting up a trust” in the keyword box (no quotes). Here’s a couple I found pretty quickly which I think provides info on the first steps:
https://www.propertyinvesting.com/forums/property-investing/help-needed/4332965
https://www.propertyinvesting.com/forums/getting-technical/legal-accounting/4333559trustmagic.com has some really good info. The ebook costs the same as 6-7minutes from a good lawyer.
I haven’t done this yet myself, but I spoke to my bank contact earlier today and there is no problem using equity in one property held in your own name to secure a loan held in a trust’s name.
I can’t answer your second question definitively, but I’m pretty sure the answer is, yes you can transfer assets into a trust but you are almost certainly going to get hit with CGT and stamp duty on the transfer as it is effectively change of ownership from one legal entity (you) to another legal entity (the trust). In fact, if your offer & acceptance (or equivalent depending on state) has your own name and you try to change it before settlement to the name of the trust you can end up paying double stamp duty – see https://www.propertyinvesting.com/forums/property-investing/help-needed/4332359
Good luck
There might not be an issue but no-one in their right mind would do so.
there is no problem using equity in one property held in your own name to secure a loan held in a trust's name.
Richard Taylor | Australia's leading private lender
Oh yes – not thinking straight and regurgitating the banker’s line. So you would extract equity on 1st via LOC then standalone loan secured solely on property held in trust, using LOC as required to cover deposit & LVR requirements on trust property – keeps things a bit cleaner?
No one in their right mind would be setting up loans without talking to a mortgage broker experienced in property investment
Exactly JJ.
You personally take out the LOC and then lend these funds to the Trust.
Keep the securities separate especially if you are not the sole Trustee.
Richard Taylor | Australia's leading private lender
Thanks heaps everyone I really appreciate the advice! Looks like I have a bit of homework to do but it gives me a much clearer view on things and how to approach this.
I'm sure I will have a few more questions down the track.
Kind Regards,
Matt
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