Partition of property between trust/individual?

Discussion in 'Accounting & Tax' started by Mattleno, 28th Nov, 2019.

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  1. Mattleno

    Mattleno Member

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    Hey guys,

    I have spoken to both my accountant and lawyer a few months ago in regards to a development and I just want to see if anyone can help me here before I pester them.

    I am preparing to do a development in Melbourne. I will be purchasing a property through a trust and subdividing the rear to build two townhouses.

    I’m going to partition the property once subdivided so the original house at the front is in my individual name and I will be living in it for CGT and the rear townhouses will be sold through the trust and distributed to beneficiaries.


    My question is once I partition the front property into my name will there be more stamp duty implications.

    Between my broker, accountant and lawyer we have deemed this to be most feasible for my circumstances but if anybody who has done this or knows more feel free to send me a message.


    Thanks and regards
     
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  2. shorty

    shorty Well-Known Member

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    Not advice, but could you purchase the property 50/50 as tenants in common with the trust? Might work with a deed of partition but you should seek legal and tax advice.
     
  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    See my legal tip on this topic
     
  4. Paul@PAS

    [email protected] Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Depending on how the trust is structured there could be no duty or transfer duty could apply. My greater concern is the partition would be a taxable supply and subject to GST since the trust is conducting a enterprise. I would be seeking legal advice on the duty, CGT and GST implications.
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Yes it would be a CGT event if not done from the beginning.
     
  6. thydzik

    thydzik Well-Known Member

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    Purchase the property 50% trust, 50% individual.
    get the valuations done after the subdivision. Won't be exactly 50% split but should save a bit of tax.


    Alternatively, work out your profits and how you will distribute and purchase the property in that split.
     
  7. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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