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Legal Tip 11: Other legal ownership structures

Discussion in 'Legal Issues' started by Terry_w, 29th Jun, 2015.

  1. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Other legal ownership structures (non individuals)


    Last time I focused on the different ways to own property in personal names, see


    This time it is the non personal. Basically there is just two

    1. A company

    2. A legal person acting as trustee

    The Trustee could be any one of the following:

    1. a person

    2. two or more persons

    3. a company

    4. two or more companies (unusual)

    5. a person and a company (unusual)

    The trustee could be acting as trustee for any of the following trusts:

    1. Discretionary trust

    2. Unit trust

    3. Hybrid

    4. Self Managed Superfund

    5. Bare trust

    6. Custodian trust

    These are the broad types of trusts with different types of each. Unit trusts could be fixed or non fixed for example. There are 4 broad types of discretionary trusts, multiple different ways to structure a hybrid etc.

    Many of the above trusts could be set up under a will too - then they would be a testamentary discretionary trust etc.
     
  2. TyroneS

    TyroneS Well-Known Member

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    Hi Terry,

    Thanks for sharing this. I would like to know the benefits of putting it in a discretionary trust versus buying property in your own name?

    I'm purchasing my 2nd property and deciding whether it's a good idea to purchase this next one in a trust?

    Also what are the questions I need to be asking when I am borrowing money for the trust to purchase the property as well?
     
  3. 10in10years

    10in10years Member

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    Thanks terry, how does buying with these structures effect tax issues, ie depreciation and cgt? Also if it is negative or positively geared, can the interest expense still be deductible?
    Sorry if these are really basic questions for you guys.
    Cheers, Steve
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    The owner of the property claims the costs. For tax purposes a trust can be considered an owner. If there is a loss it cannot be distbruted to other tax payers. Income and CGs will flow through a trust to beneficiaries but a company will be taxed.
     
  5. Switchtronics

    Switchtronics Active Member

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    Hi Terry,

    Would you think purchasing a property in a company as trustee for a discretionary trust would be effective for asset security and future purchases if it's likely to be positively geared in the short term? The company receives a a distribution that could offset the negative gearing at first and buying with the trust would keep the 50% cgt and keep losses locked into the trust.
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It all depends - what are you trying to protect against and have you considered all the other issues - there are about 12 main ones such as land tax, succession during your lifetime/after death, income tax, cgt etc
     
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  7. Switchtronics

    Switchtronics Active Member

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    Can I call you tommorrow? Sent the finance stuff through to you just want to put the right details on the contract. No land tax in n.t. was considering unit trust for succession later on into super and cgt saving.
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Yes but I charge $660 for a consultation.
     
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