New property in fixed unit trust

Hi All,

I am looking at buying another property in a fixed unit trust for NSW land tax purposes that I am about to setup. I am allocating all units to my wife as this property will utilise her land tax threshold.

I am looking at some feedback on how best to structure the units as I have not bought properties in a unit trust before.

My main area of confusion is the number of units to select and if this really matters?

Are there any other structural complexities to take into account?

Thanks

 

Heaps to consider.

Will she borrow to buy the units of the trustee borrow?

 

When I did mine I personally borrowed to buy the units then the trustee invested with the funds.

Did units at $1 each to make it easy to calc.

 

The trustee is a company and the property will be in the trustees name. Does this make it easier?

 

What's the advantage of borrowing in ones personal name?

 

Property will be cashflow positive BTW

 

It can be far harder to get a loan structured so you borrow to buy units. There are other ways if that issue is encountered. Take care and get good guidance as DIY unit trust solutions can be very expensive to fix. eg Dont issue a stack of units when the trust is first settled.....It can trigger a duty problem.

Settling the proceeds for the trust units is a VERY important step that should not be skipped to save a few days and bank fees. Or skipping on completing applications, certificates and updating the register of unitholders. All info OSR will require later when you apply for the fixed trust concession.

 

Hi Paul

How do I do the following:

1) Settling the proceeds for the trust units
2) completing applications
3) certificates and updating the register of unitholders

What do I need to provide to the OSR for the above?

Thanks

 

I think you're at the point where you need to sit down and get proper advice from someone on this. These aren't easy to answer questions in text form.

 

The above indicates why advice and support is needed. All the minor mistakes some make = major tax issues. eg Stamp duty on deed, "lets sign it all later", we dont need a bank account do we ?.....

 

Easier in what sense?

 

Unit Trusts and the 2 methods of Borrowing https://propertychat.com.au/community/threads/unit-trusts-and-the-2-methods-of-borrowing.7090/

 

Bank account, settled amount etc are all clear to me if that's all you are talking about, I have bought properties with trusts before.

The certificate and register of unit holders come with the trust.

You make it sound like there is more to it.

 

thanks

 

Property is cashflow positive, trustee will borrow, thanks

 

More than 2 really depending on the state. Perhaps even a SMSF in some cases to help fund the deal and be positive geared v's other unitholders who are neg geared. What is the loan security ? What LVR ? Who can lend - Bank or external lender ?

 

If you dont know you make a mistake then it doesnt happen ?

I used to work for a trust formation firm and if I could share common mistakes advisers make it would surprise you. Let alone those who dont know tax etc. There are some things in life best left to those who know....

Child birth, funerals, tax ,electrical work, building works (structural), dentistry, medical procedures and legal would be some on my list of things you wont save money when you DIY them.

 

Seems like a lot of advisers make mistakes as well so getting professional advice is not always a guarantee, as you have pointed out.

 

Professional indemnity insurance may help if an advisor gets it wrong.

 

ok thanks