Family/discretionary trust

Discussion in 'Superannuation, SMSF & Personal Insurance' started by Sylquiv, 8th Jun, 2022.

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  1. Sylquiv

    Sylquiv Member

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    Hi I’m thinking of going to create family trust to continue my property investing as it will help me to keep buying without affecting my borrowing capacity as much as when I buy in my name. But I’m in need of help with setting it up. Who should I talk to about this
     
    Sylquiv, 8th Jun, 2022
    #1
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Only a solicitor can give legal advice and trusts involve complex legal advice and drafting.
     
    Terry_w, 8th Jun, 2022
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  3. Simon Hampel

    Simon Hampel Founder Staff Member

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    Will it?

    I think you need to speak to an accountant and tax adviser to see whether such structures would fit in with your personal financial circumstances, and also speak to a mortgage broker about how your proposed structure might affect your ability to borrow money.

    Trusts are not for servicability - they are for asset protection. I suspect you may find that your servicability becomes worse using a trust in the short term - until you have a lot of assets already in the trust.

    For most people who are at low risk from an asset protection perspective, the costs of using trusts outweigh the benefits.

    You should definitely consider a trust if you are in a high risk profession, or are a company director - but again, the purpose is asset protection, not servicability.
     
    Simon Hampel, 8th Jun, 2022
    #3
  4. Scott No Mates

    Scott No Mates Well-Known Member

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    That's dangerous.

    If you are still going to be investing in your name, why have a trust?
     
    Scott No Mates, 8th Jun, 2022
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    marty998 likes this.
  5. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    If the property will be neg geared a trust may be a poor choice as the losses will be trapped in the trust.
     
    Paul@PAS, 8th Jun, 2022
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  6. Sujay_Gulwadi

    Sujay_Gulwadi Active Member

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    I use this particular strategy of purchasing property in a trust, as opposed to own name. From a lending perspective it definitely helps for serviceability, however a few considerations and rules of thumb. 1) keep LVR to below 65% and ideally 55% range. 2) if buying a commercial property use a lease doc loan, whereby lender assess the strength of lease alone as criteria for lending. This also usually means your LVR will need to be around 40-to-50%. 3) be ready to pay approx 7% + bbsw.

    All the best…
     
    Sujay_Gulwadi, 18th Oct, 2022
    #6