Investment property to PPOR (on Trust)

Discussion in 'Business Accounting, Tax & Legal' started by Hari Yellina, 1st Nov, 2021.

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  1. Hari Yellina

    Hari Yellina Well-Known Member

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    Hi everyone.

    If I buy an investment property on trust

    1) 20% Deposit money from another investment property (equity loan)
    2) 80% Bank Loan.

    I Rent it to myself for 5 years, pay the rent at market price.

    After 5 years, I want to declare it as PPOR.

    What are the implications? with tax. Because the initial deposit was taken out from another investment property.

    Thank you.
     
    Hari Yellina, 1st Nov, 2021
    #1
  2. Trainee

    Trainee Well-Known Member

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    Who is the trustee? In trust for who?
    If yourself, how do you rent to yourself?

    If say a pty ltd company is trustee, can you declare it as ppor if you dont own it?
     
    Trainee, 1st Nov, 2021
    #2
  3. Hari Yellina

    Hari Yellina Well-Known Member

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    Pty Ltd is the Trustee.

    Yes, we can declare it.

    A lot of professionals do own their PPOR through trust. Trust is worded in such a way you can own PPOR in trust.
     
    Hari Yellina, 1st Nov, 2021
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  4. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    I'd really like to know more about this, I've never come across it (and have been playing with trusts for almost 20 years). How is it implemented? Does it give you the same CGT exemption?
     
    Peter_Tersteeg, 1st Nov, 2021
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  5. Hari Yellina

    Hari Yellina Well-Known Member

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    Yes, you do get CGT exemption, as well if it is PPOR

    If you are renting yourself, there is a way you will get it.
     
    Hari Yellina, 1st Nov, 2021
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  6. Terry_w

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

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    It depends on what you mean by this?

    If your ownership interest is held by the trustee of a discretionary trust there is no main residence CGT exemption.
     
    Terry_w, 1st Nov, 2021
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  7. Paul@PAS

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

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    Vic has a limited PPOR exemption for trusts and a residence which only applies for land tax. The trade off is no CGT exemption. Some forms of trust where the unitholder or beneficiary has a fixed right may access the exemption. Its not easy as the asset protection is of dubious merits if the individual has such rights. Its a issue for legal advice to address the trade off.

    The main residence exemption applies to a ownership interest owned by a individual.

    ITAA97 s118.110(1) INCOME TAX ASSESSMENT ACT 1997 - SECT 118.110 Basic case

    Have you sought legal advice on other forms of trust eg a Deed of apparent purchaser ? This wont work with borrowing.
     
    Paul@PAS, 2nd Nov, 2021
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  8. Terry_w

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

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    It is possible to get the main residence CGT exemption on a property that is legally owned by the trustee of a discretionary trust, but there needs to be an ownership interest held by an individual
     
    Terry_w, 2nd Nov, 2021
    #8