- G'Morning Everyone,My wife and myself are planning to buy a property (which is sub-dividable). There is already an offer (not accepted yet) on it by someone else and most likely after doing our Maths properly we will put an offer as soon as possible (next week). We plan to do a quick renovation and rent the existing house and then within 6 months should have another house. Once this is done we will sell the old house and rent the new house or may be if it works out well, we can rent both the houses. My queries in regards are:1. Whether we should buy the property in the name of the Family Trust (which we still need to create) or just in the joint name. I wanted to know what are the Capital Gains Tax implications if buying on Family Trust Fund.
2. How much time it takes to the Family Trust name registered as need to put it an offer within next 5-10 days.
3. In the Family trust, is it better to have the Company as the trustee when it comes to property.Financing the deal shouldn't be a problem. I will be contacting an Accountant to do this but if I can have more information as to what would suit best (Trust or Joint Name) in Property Investing then I can be more confident. Any further suggestions or links to read would be really appreciated as this is going to be my first deal as an Investor and want to be as informative as I can be. Thanks everyone in advance for all your help.I dont want to appear negative but if you are approaching your Accountant to finance the deal shouldn't you also be approaching him to ask him what structure and entity you should use.
Surely you are paying him for his advice and not relying on the commission he received from arranging the finance.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Hi Richard,
Thanks for your response. I am just meeting up with the Accountant to find the best way to structure the loan (trust or joint). Finance will be done by a broker or directly contacting the bank. Please feel free to advice.
Maybe i am slightly biased but i would say is your Bank is not going to tell you there is a better offer down the road.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Do you have a lot of assets that you need to protect? Are you vulnerable to a law suit? Is the property going to be positively cash flowed.
Firstly you should know you can't negatively gear a trust. So if you are after the tax write offs from a negatively geared property then you won't get them.
Secondly, if there is another offer on the property and you have to move quickly then do you really think bringing a trust structure into the deal will make it move along quickly?
Ultimately trust structures are great for protection yourself, but I shot myself in the foot early on when I tried to purchase a smaller property in a trust structure. It takes time to set up the trust (and the holding company) and then it takes even more time to get loan approval because with some lenders getting a home loan in your own name is a completely different department to getting a home loan in the name of a trust.
See what your accountant says for your specific situation as every situation is different.
Ryan McLean | On Property
http://onproperty.com.au
Email MeThanks Ryan for your valuable information. The information you provided has been really helpful. To Answer your questions:
Do you have a lot of assets that you need to protect? No
Are you vulnerable to a law suit? No
Is the property going to be positively cash flowed. Not at the start but main purpose of this deal would be to subdivide and gain a profit in 6-12 months.One other query I have is how does the CGT work on a Trust or Individual names. Could you please advise whether the maximum CGT payable on the IP is going to 30% or 50% if we sell the property in less than 1 year or more than a year. Thanks once again in advance for all your help.
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