We have a Family Trust Owned Home and would like to rent it to one of the family trust. Question is: What would be fair to consider when determaining the rental/lease cost?
How do we position what the rent/lease amount will be for.This family member believes that any rent that they pay, should be given back to them when the property is sold. This doesn't seem fair because they basically could be living rent free. This family member views the rent as money thrown away. We don't want to rent it for the going rate, but would like to rent it at a low rate that is fair to the rest of the trust members and could cover taxes and insurance (the house is paid off)
How best to we explain the rent and should it be returned to them when sold? Isn't this basically rent free when all is said and done?Do you mean a beneficiary of the trust wants to rent it?
Firstly you will have to check the deed to see if this is permissible. Your deed may also specify the procedures to be followed such as charging market rent etc. the trustee can only act in accordance with the deed (or tax act/court order maybe) and if he/she/it doesn't then they may be sued by other beneficiaries.
You will also have tax issues, especially if the trust is renting it for less than market value.
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
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