Create a trust to minimise land tax

Hi there
Is it really helpful if I create a family trust and buy an investment property in it
It will be quite negatively geared for some years
The beneficiary of the trust will be my parents, us and our children
The main idea is to save on land tax as we plan to add more properties to our portfolio
Cheers

 

Some states aggregate land tax based on beneficial owner (eg SA) so it can be of limited to no value

 

I am in VIC
Cheers

 

But are you buying investment properties in Vic? I ask as the best way to minimize land tax is to spread your investment property purchases around the different states of the country and use your land tax free thresholds in each state.

Jason

 

I was seriously thinking of investing in Brisbane, but I realised that I may end up buying a lemon
It requires a thorough research of each suburb for which I don’t have the aptitude or time sitting in Melbourne
I researched Melbourne over 3 years before I got the courage to buy
Cheers

 

If looking at buying in vic it is worth considering a company to hold property with the shares of the company held by the trustee of a discretionary trust. But the land tax isn't as bad as it is in NSW.

 

But, if negatively geared tax losses would be trapped in the company or trust?

 

Yes

 

The whole issue surrounding use of a trust needs broad advice as land tax is a small element. In VIC the merits of a trust wont necessarily produce a saving since the trust doesnt get a threshold as such. It does in QLD but its reduced but can be multiplied. In NSW there is a threshold of $0 so a trust pays MORE land tax than a individual with threshold may. Then the issue of neg / pos gearing, loans and many other aspects ...eg costs ?

 

Better way to minimise land tax is to buy properties across multiple states

 

- Costs of setup ($1800?++)
- Annual costs incl extra tax efforts approx $550+++ and ASIC fees $280 both pa v's an additional schedule for tax purposes
- Mistakes like having a human trustee
- Issues with changes (Changing a trust in QLD can trigger full duty)
- Finance issues more complex and abundant but less lender options
- Guarantees and issues with Directors etc
- More complex succession on death, incapacity etc
- Cant distribute losses. Trusts often fail for neg gearing.
- Beneficiaries ? Single people have a tax problem. Can be resolved with a bucket co with more costs....and limits
- Parent beneficiaries are often a consideration BUT not really if they work or receive pensions or stand in need of future aged care
- Potential for QLD to one day bring its land tax regime in line with all other states to allow a single threshold