Live in property held in a trust

Discussion in 'Legal Issues' started by wayne, 11th Feb, 2017.

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  1. wayne

    wayne Well-Known Member

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    Hi all,

    We have a property held in a soon to be a fixed unit trust. We intend to move into this property as our PPR. Are there any mechanisms that may exclude a land tax requirement.

    I have heard mention of: [Life time entitlement] which will exclude a property held in a trust and used as a PPR attracting Land tax.

    Can anyone confirm this as an option.

    Cheers
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    If NSW then the unit holders will be treated as the owners of the land if it is a fixed trust meeting the LMA definition
     
  3. wayne

    wayne Well-Known Member

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    Thanks Terry,

    Yes the property is in NSW and is held in a fixed unit trust and it was too expensive to remove.
    Not sure what is meant by LMA.
     
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    Last edited: 12th Feb, 2017
  5. wayne

    wayne Well-Known Member

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    Thanks terry,
    Our trust satisfies all requirements of the LMA. Just to clarify, there are two NSW properties held in the trust, is there a process required to notify that a property will be used a PPR and be land tax exempt.

    Thanks
     
  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    It won't be able to qualify as the main residence I think. You could just get the threshold
     
  7. wayne

    wayne Well-Known Member

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    Hi Terry,
    Found this on the OSR website:

    Please see below in red.

    Revenue Ruling No. LT 082 Version 5
    The Principal Place of Residence Exemption
    Schedule 1A Clauses 1-14 and Sections 9C & 9D Land Tax Management Act 1956

    Companies and trustees not exempt – clause 11
    If the land is owned by a company or trustee of a special trust or if a company or special trust is a joint owner, the land will not be entitled to the PPR exemption under Schedule 1A unless one of the following exceptions is satisfied:

    • the company is a “trustee company” as defined in the Trustee Companies Act 1964, or is the NSW Trustee and Guardian; or

    • the company is the trustee of a “concessional trust” as defined in section 3B of the Act; or

    • the land is subject to an agreement for sale, the company or special trust is the owner and vendor of the land, and a purchaser (who is not a company or a special trust) is deemed to be the owner of the land under section 26 of the Act, to the exclusion of the vendor or registered owner; or

    • the company is the owner of land which is used in a company title unit scheme to which section 21A of the Act applies; or

    • the company is the owner of the land as the personal representative of a deceased person, and under clause 10 the land is deemed to be owned by the person who uses and occupies the land.
    If the company is a ‘family company’ and a director occupies the residence on the land, or if a company acts as a trustee for natural persons who use and occupy the residence on the land, the land will not be exempt.

    If the owner of the land is the trustee of a special trust (as defined in section 3A of the Act) the land will not be exempt because the beneficiaries of such a trust are not regarded as owners of the land for land tax purposes. If the land is owned by a trustee of a fixed trust, and the trustee is a natural person, the exemption will apply if the land is used and occupied by a person beneficially entitled to the land under the terms of the trust. If the trustee as well as a beneficiary uses and occupies the land, it may be exempt. However the exemption does not apply if the trustee alone uses and occupies the land as his or her PPR.

    From the 2014 tax year, if land is deemed to be owned by more than one owner, all of the owners of the land are taken to be joint owners of the land for the purposes of clause 11. The PPR exemption is no longer available for land owned by a company or a special trust where a life interest has been granted to a natural person unless:

    • the life estate was created by the express terms of will and not by the exercise of a discretion conferred by a will; and

    • the duration of the life estate is based on the life of the tenant and not on the life of some other person.
    Thoughts
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker Business Member

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    That's a big if
     
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