Join Australia's most dynamic and respected property investment community

Lower land tax by hold one property in the name of two trusts?

Discussion in 'Legal Issues' started by wylie, 30th Dec, 2016.

  1. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    3,267
    Location:
    Brisbane
    If I already have an IP in my name, and it is almost up to the threshold on its own, and I decide to buy another, then I'm straight into land tax territory.

    With trusts having a lower threshold of $350k could I create two trusts? Two trusts, controlled by me, would buy the house, equal shares.

    Would each trust enjoy its own $350k threshold?

    I went to OSR site and found this (below) but I'm not sure what a cloned trust is, and whether doing this would work, or if someone would put the values together if I'm in charge of both new trusts plus an IP in my name.

    This is Queensland property.




    From the OSR site...

    Trustees
    The land tax rates for companies, trustees and absentees will apply.

    In Queensland, trust land is registered in the name of the trustee. If your assessment includes both trust and non-trust-owned land, or is not assessed at the rate for trustees, call us on 1300 300 734 to discuss the trust relationship.

    As a trustee, you are liable for land tax if the total taxable value of the freehold land held for that trust is $350,000 or more.

    You may be able to apply for exemptions to reduce your total taxable value.

    When calculating your total taxable value, we will not add the value of land held for one trust to the value of any other land you hold as:

    • trustee of another trust, unless it is a cloned trust
    • an individual or company.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,620
    Location:
    Sydney
    Yes it is possible.
     
  3. kierank

    kierank Well-Known Member

    Joined:
    20th Jan, 2016
    Posts:
    1,338
    Location:
    Brisbane
    As you know, I am not a lawyer but, my understanding is, that a cloned trust is one that has the same trustee and same beneficiary list.

    Hence, to do what you are seeking, it is my guess that the trustee of the two trusts must be different or the two lists of beneficiaries have to be (significantly) different.

    I trust (no pun intended :) ) this helps but I could be wrong. You will need to seek legal advice (as I know you will).
     
  4. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,620
    Location:
    Sydney
    I think having different trustees will do the trick
     
    kierank and Ross Forrester like this.
  5. Yson

    Yson Well-Known Member

    Joined:
    4th Jan, 2016
    Posts:
    177
    Location:
    Sydney
    Can it be two companies as trustees but owned by same person, would it serve Different trustees?
     
  6. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,620
    Location:
    Sydney
    Yes
     
    kierank likes this.