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Buying in a trust, expenses from personal accounts

Discussion in 'Property Finance' started by Bran, 17th Apr, 2016.

  1. Bran

    Bran Well-Known Member

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    How do I ensure deductibility?

    Property purchased through a trust.

    Deposits/renovations/expenses were all paid from borrowed funds, trackable, and not mixed with non-deductible funds (but were mixed with other deductible non-property expenses).

    In essence, I am lending the trust money, that will ultimately pay back - but how do I log and document this and how do I maintain deductibility? (Not huge amounts, so not the end of the world, but still...)

    (Perhaps the title should read loans rather than accounts)
     
  2. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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    What sort of trust?
     
  3. Bran

    Bran Well-Known Member

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    Discretionary
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You should enter into a loan agreement with the trustee.
     
  5. Bran

    Bran Well-Known Member

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    I thought so. This can be done with small and odd amounts?

    Does one charge interest etc? Or just to be paid in full.

    My accountant should be able to sort this out right?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    This is lawyer material = contracts/deeds. You might just have an oral agreement if there are small infrequent amounts which are quickly reimbursed. If you are borrowing and onlending then you have to consider the deductibility of interest and would want a written agreemetn on arms length terms.

    A tax agent can help with the tax side.
     
  7. RPI

    RPI Property Lawyer, Town Planner Business Member

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    Line of Credit is the answer.

    You enter into a loan agreement with the trustee that is capped at $250K. Then keep a excel spreadsheet as evidence of loan.

    Even better if the loan comes not from you but from another disc trust whose sole purpose in life is to accumulate wealth and lend monies to your other entities.

    If the loan is from you and you personally go under then your creditors get the benefit of it.
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    What I do is set up the loan agreement so that it covers an initial sum lent and any further sums lent from time to time.

    Don't forget the limitations act too.
     
  9. Wall Street

    Wall Street Well-Known Member

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    The loan needs to be done at a commercial terms. ie. in writing, specifying timeframes and repayments , etc