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Strategy advice, negative gearing, tax and family trust

Discussion in 'Accounting & Tax' started by Brenden, 10th Aug, 2015.

  1. Brenden

    Brenden Member

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    What disadvantage would they have to owning real property in a trust? Like I said it won't be really negative geared unless the rental market drops.
     
    Last edited: 11th Aug, 2015
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Its a bit late now if they have enter into a contract. but better late than never as they could rescind and enter into a new contract.

    Sounds like you are only looking at the taxation aspects, you need to also consider land tax, structure of the existing trust, terms of the deed, structure of the trustee company, estate planning, stamp duty on changes down the track, effect on social security down the track, asset protection against creditors, family members and incapacity etc.
     
  3. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    Strange time to be on holidays most accountants are scrambling to get any sleep this time of year
     
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  4. Brenden

    Brenden Member

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    What disadvantage would they have to owning real property in a trust? Like I said it won't be really negative geared unless the rental market drops.
     
    Last edited: 11th Aug, 2015
  5. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    It would probably be a good idea to form a new trust if you want to go down the trust path. the advantage here is you could structure the trust well from the start and segregate the loss so as it use it up at a strategic time.

    land tax may not apply now, but consider growth. It may or may not apply in their individual names either.

    Trust holding property have 3 main advantages
    1. Tax streaming of income and capital gains
    2. asset protection
    3. Estate planning

    If a person dies they can will the property, but the property can also be attacked by attacking the will. A trust doesn't die with the individual, but the control just passes on to someone else and the trust assets do not form part of the estate of the dead dude. This can have advantages but has significant disadvantages because whoever will control the trust will probably also be a beneficiary. So if the current appointor has 2 children and one takes control they can exclude the other child and their family.
     
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  6. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    I wish I was on holidays....
     
  7. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    One of the most problematic issues with a DT at present is the lender expectations and also ensuring the trust is neutrally geared. Think longer term too and equity release will be a problem for almost all lenders.