Putting PPOR into family Trust

Makes sense, definite food for thought Terry. Thank you.

It is only a PPOR temporarily, the main purpose of it is to be an IP, just circumstance has it that I can't currently just purchase a property as an IP straight off the bat and continue renting.

Apologies if it seems as though I am coming off as trying to leech information that would normally be paid advice, I'm still new to the forums and learning the boundaries between general advice and tailored financial advice. Entirely grateful for all opinions and advice so far, I am learning so much already!

 

Reasons against
- Punitive land tax in some states and likely to remain a issue and perhaps even worsen with time
- No CGT exemption for main residence or the absence rule.
- Difficulty with equity release finance. Lender to trust A will not allow finance to be used for Trust B. Most lender policies are strict on this issue now.
- Restricted lenders v's human ownership
- No ability to use finance principles
- High annual costs for ASIC fees, accounting and tax
- Some behaviours are poorly understood and can harm asset protection. (eg using matrimonial money to maintain the trust etc...Perhaps even residing in the trust property)
- Inheritance issues. No an estate asset ? Control of trust ?
- Moving overseas for 2 yrs + triggers a CGT event
- Risks of trustee in bankruptcy assuming control
- Inability to include third element CGT costs while it is occupied
- Perpetuity

Reasons For
?

 

No I wasn't really accusing you of this - its more that I had in mind what Paul just stated above - that I can't see hardly any benefits with such a trust, and I can see a lot of potential downsides.

 

All good mate, being a newbie, the last thing I want to do is get on the general communities bad side, appear as too annoying, looking for free handouts or anything of the sort. I really just want to have a basic understanding of all aspects of property ownership, so once I do dive in, I have a basic understanding of all the cogs, which will enable me to recruit a good team of people to help me succeed.

In the words of a Drake song "started from the bottom now we here". Well I'm at the first part of that lyric, and want to end up at the last part as the intended meaning of it.

It sounds as though generally people aren't really a fan of putting property into discretionary trusts, which tbh is surprising. The main things I initially liked about it are

-The ability to divvy out any +ve cashflow profits to my partner who is basically earning under $18,200 at the moment, and will probably continue to do so as we are soon approaching the "have kids" stage.

-Estate planning, for when we do have kids.

-Asset protection, because imo we are becoming so American-ised, and I wouldn't want to put my future children's properties at risk because some idiot scammer sued me and won...or for whatever reason, bankruptcy becomes a looming issue (if the trust has been set up correctly).

 

There are other strategies you may want to consider - one is the 'gift and borrow back strategy'.

Legal Tip 115: The Gift and Borrow Back Strategy, Part 1 https://propertychat.com.au/community/threads/legal-tip-115-the-gift-and-borrow-back-strategy-part-1.7544/