Purchasing through trust or SMSF?

Discussion in 'Accounting & Tax' started by arewethereyet, 22nd Jul, 2022.

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  1. arewethereyet

    arewethereyet Well-Known Member

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    Based on my initial reading about family trusts & SMSFs, I don't believe they'd be useful for the following scenario I'm considering:

    * SINK, high tax bracket
    * Cash purchase of an investment property
    * Expecting +5% gross yield & minimal capital gain

    I'm on the fence about whether to pursue this option, versus investing in bonds/stocks, or even leaving it in my PPOR's offset; however I like the comfort of having a debt-free, rent-free bolt hole I could use if a loss in income made mortgage repayments too challenging.

    If I were inclined to get serious about this, given the factors I've mentioned, would you recommend investigating making the purchase via a trust or SMSF?
     
  2. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    You are asking tor licensed financial advice?

    No.
     
  3. arewethereyet

    arewethereyet Well-Known Member

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    I don't understand your response.

    Are you asking me if I'm asking for licensed financial advice? If I knew I was, then I wouldn't be asking.

    Or is that misplaced punctuation and you meant to use a '.' and make that a statement? (I'm assuming it's not snark)

    And does your 'No.' mean you don't believe it's worth exploring using a trust or SMSF to make that purchase?
     
  4. Terry_w

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

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    Considering it is possible to cap the income at 30% with a trust and bucket company or 15% with a SMSF I thought it would be useful to consider a trust at least or a company.

    Not a good idea to use cash to buy an investment property generally, and you could set up a trust or a company holding a property by lending it the money to buy.

    High income could mean cheaper second hand property so a company could result in some tax savings worth considering.

    Think about the tax consequences before using this money, no matter what the subject.

    No. But I would recommend you get some legal advice. If your SMSF wants to invest the trustee could get financial advice as could you if you want to contribute to super.