When to form a trust?

Hello Macca12,

The best  person to speak to about TRUST is your qualified tax accountant. There are different type of TRUST accounts and they have their pros and cons.

Given the seriousness of your venture, get the expert advise so you understand clearly the advantages and disadvantages of using TRUST account.

Just to give you some idea about TRUST (e.g. discretionary trust), provides asset protection and minimise tax payment particularly if u are on high tax bracket. In addition, you control of your assets (e.g. investment properties) but you don't own them hence if you get sued personally since you don't own your assets they are pretty safe but in divorce discretionary trust such as family trust is meaning less since all assets get divided up by party involved (e.g mum and dad).

Dis-advantage of discretionary trust, if your IP is negatively geared, the loss income get trap in it hence you wont get tax breaks unlike if you purchased the IP in your personal name.

As said, get some expert advice, for a fraction of fee you pay, such expert advise is invaluable.

DON'T UNDER ESTIMATE ON HOW YOU STRUCTURE YOUR IP…TAKE IT SERIOUSLY.

All the best and good luck mate.

Cheers Leo

Trusts are great for a number of reasons. One not many people think of is the ability to include outsiders in servicing calculations if you suddenly find you cannot get finance.

eg If you bought land in your own name then later couldn't get finance to build you are pretty much stuck. But if you had a company as trustee for a trust you could easily add in another director to the company and then get the bank to assess serviceability on both incomes. You couldn't do this personally – unless you were spouses maybe.

Trusts, Can i ask

If i set up a trust. Buy a house (using trust). Pay deposit from LOC.

1) Any money the trust loses stays locked up in trust. But can i carry the loss forward into subsequent years until the trust makes a profit?

2) Can i claim the interest on the 20% deposit from LOC as a tax loss against my personal income?

TerryW,
In which case i take it the normal approach is lend the trust 20% from LOC. Get the trust to borrow 80%, so that 100% of interest costs are incurred by the trust for the property.

Can anyone confirm if they have paid stamp duty when adding a director to an existing trust?  My accountant has warned that I may be liable for stamp duty etc if I add another director but I won't know until the application is lodged.  Does this sound right or am I being led down the garden path? I thought one of the best aspects about having a trust was the ability to easily add another director. I don't see how I end up paying stamp duty again when the property has not been exchanged.