Hi,
I am planning to purchase property but I don't want to purchase in my name for any minutest % due to personal reasons not necessarily asset protection being the criteria. I am happy to purchase in my wife's name but I am not sure if I can borrow the funds on my name and claim the losses in my tax return, if anyone knows this is feasible please let me know how to structure such an investment. The best alternative I can think off is utilizing trust structure prefer DT or Unit rather than HDT as I believe they have issues with ATO based on various people's comments on the forum. Each of these structures have advantages and disadvantages and too much complications can lead to lot of costs, so I was thinking of buying properties in unit trust and have me and my daughter (maximum allowed tax threshold) as beneficiaries of the unit trust. Is this structure feasible for me to claim the losses? Secondly if I don't want to own the units which entity would be better to hold the units company or DT? If that is the case then will I need to pay additional fees to accountant? Any help would be greatly appreciated.
Also just wanted to check that one of the accountants said to me cost of setting up UT is 250 is this correct?
Thanks
You sound confused.
If you wife buys property you cannot claim the interest or any deductions – or anything.
If you buy in a unit trust you cannot claim anything either. If you borrow to buy units in a unit trust then you may be able to claim the interest. Is your daughter a minor? This will complicate things.
To set up a structure like this with proper advice you are looking at a lot more than $250
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
Thanks for your feedback. Yes my daughter is a minor. What complications will arise if minor is a beneficiary in the trust? Why setting up trust becomes complicated when borrowing comes into picture?
Thanks
If you set up a unit trust with your daughter as unit holder she would have to pay tax at 66% on her income from the trust. The trustee would have no discretion not to give her income.
Also, lenders require all unit holders to guarantee the loan. So I am not sure how they would treat such a situation. May not be possible to get finance at all.
Trusts are extremely complex legal relationships so you have to expect things to be not so easy.
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
Thanks for the reply. I have been reading various threads and books this never seems simple to set up and run. The advice given by the accountant I met was not good. I think I will have to set up meeting with someone like you my only issue is costs for set up should not be prohibitive. Anyway thanks for your help
I see you wrote that you don't want to own the units, instead a company would hold them. IN that case, then you won't get any tax deductions. As Terry pointed out, the tax deductibility of interest in a unit trust is because the individual has borrowed to buy units in the unit trust. The unit holder gets to claim the deduction.
Purchasing the unit trust documents could be done for as little as $250, however any accountant or solicitor worth his/her salt would want to make sure that the structure / setup / unit holders are correct for you, your family and your situation. This advice costs $$, but has the potential to save you plenty of $$ down the track.
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