Selling IP to family trust

Discussion in 'Loans & Mortgage Brokers' started by Mogul, 15th May, 2017.

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  1. Mogul

    Mogul Active Member

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    After doing some reading on this forum, it has dawned on me that post June 2017, I might be better of setting up a family trust and selling my IP to the trust.

    The reasons I would do this are:

    1. IP is slightly positively geared for 2017/2018 tax year
    2. Asset protection (due to vocation)
    3. Reduce my personal debt so that lenders will lend me $$ for next purchase ( am only on a $70k p/yr wage)

    I have only held the IP for 12 months. 90% LVR and LMI of $16k paid upfront when purchased.

    I don't have a PPOR - am thinking about buying one.

    Does this sound like a viable strategy?
     
    Mogul, 15th May, 2017
    #1
  2. Greyghost

    Greyghost Well-Known Member

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    I don't think so.
    I think it is a case of lesson learned and move on.
    Plus paying stamp duty again.
     
    Greyghost, 15th May, 2017
    #2
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  3. Mogul

    Mogul Active Member

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    Thanks Greyhost, yeah.. my agent got me a much higher rental return than initially expected. No complaints about that though.
     
    Mogul, 15th May, 2017
    #3
  4. Terry_w

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

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    Keep reading. I don't think it is worthwhile considering at this stage.

    You will have stamp duty on the transfer, CGT - which might be small, discharge loan costs, new loan application with LMI repayable again.

    Also consider the claw back laws - both state and commonwealth.
     
    Terry_w, 15th May, 2017
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  5. Paul@PAS

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

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    Stamp duty and CGT would apply to a sale to a trust.
    Finance issues would need to be explored. You would give a guarantee for the trust loan in any case.
     
    Paul@PAS, 15th May, 2017
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  6. Owlet

    Owlet Well-Known Member

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    When is a good time to sell / move an IP to a trust?

    Just say you had a cheapy house purchased at 130k and you have enough savings to offset it. Is there any benefit to transferring it to a trust? There would be no interest to deduct because there would be no loan - could the rental income be distributed to children? Or do they pay high rates on trust income?
     
    Owlet, 11th Apr, 2018
    #6
  7. Trainee

    Trainee Well-Known Member

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    Whats that
     
    Trainee, 11th Apr, 2018
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  8. Terry_w

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

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    It would depend on the situation. If sold to the trust the trustee could borrow to buy it. Funds could then be use for something else, or parked in an offset account attached to it. You may instead decide to gift the funds to the trust and it could pay off the loan or just keep in an offset account.
    there are about 10 to 20 different scenarios to consider. but it could mean the income could be more flexibily distributed and tax saved. If the children are minors they will be taxed at up to 66%
     
    Terry_w, 11th Apr, 2018
    #8
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