Legal Tip 228: Trusts and Privacy or how to hide ownership of a brothel

I've got a question on bare trust.

I own 3 properties [ 1 PPOR & 2 IP] under my name and 7 properties in 3 trusts. I want to transfer 2 more properties into the trust leaving my PPOR under my name only. The issue regarding transferring 2 properties into the trust is that I'd be caught with stamp duty again.

The reason I want to transfer 2 more properties into the trust is to free up my serviceability. Is it possible to create a bare trust (I can appoint one of the non trading company as a trustee that I have) to take on 2 properties that are under my name? By doing this, I can get a loan under the bare trust & the title should be listed in my bare trust? One day when I have completed paying off the debt, I can transfer from bare trust into my individual name again?

thanks

 

Its possible to transfer a title to the trustee of a bare trust without duty (or $500) and without CGT.
But if you declare to the lender that the company is acting as bare trustee they will not lend.

 

Can I appoint another trust (example is a discretionary trust) as a trustee instead of another company?
In that way, I can show the discretionary trust deed when I apply for the loan.

 

A trustee must be a legal person ie a human, humans or a (one) company. A trust cant be a trustee as it not a person. Its a legal relationship.

The trustee is shown on the deed and will be the loan applicant. Directors or human trustees will also give a personal guarantee

 

DUT041v2

 

Thanks for providing the information.

Now, I want to understand in a SMSF environment, how can a bare trust obtain a loan for the SMSF to acquire properties?

Would this be the same that the bare trust obtain a loan for me (individual name) to acquire properties?

If I appoint a non trading company as a trustee of a baretrust, wouldn't the bare trustee's director (me again) just need to guarantee the asset?

 

With superfunds it is not really a bare trust, but a custodian trust.
Lenders have designed special products for these.

But for standard bare trusts no lender will lend.