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Structuring of finances and properties- Trusts or own names?

Discussion in 'Accounting & Tax' started by Seal, 29th Jul, 2015.

  1. Seal

    Seal Well-Known Member

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    we're speaking to a good accountant who is into property soon about how to structure our finances as we get into IP.

    i was wondering if people had any general comments/opinions about to have IP in our own names or trusts? The first IP will probably be in QLD. we're in NSW. I know there is no right/wrong with this, and to seek professional help. just after some opinions.
     
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    Structuring ownership? Or using trusts in related party borrowing strategies?

    Better speak to a solicitor for the structuring aspects.
     
  3. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The question is what would you be trying to achieve by purchasing via a trust? There certainly are good reasons to do this, but these tend to be tailored to specific circumstances.
     
  4. Shahin_Afarin

    Shahin_Afarin Residential and Commercial Broker Business Member

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    Just note that from a finance/borrowing capacity perspective - it potentially hurts your servicing if you purchase a property under a Trust w/ a Corporate Trustee vs purchasing under an individual name.
     
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  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    I'm with Shahin on this. I have supported and advocated trusts strategies for years. In many cases where borrowings are involved they are now complicated by:
    - Issues that limit unit trusts to a very small number of lenders and even then some of these lenders refuse to lend to anyone other than the trustee. Quarantined losses can and will occur without adequate planning.
    - Issues with servicing and the inability to access equity release as easily as personal ownership
    - Servicing calcs where a corporate trustee is used.. The recent APRA changes are changing the playing field.
    - Risks if human trustees are used
    No better example of seeking personal advice before acting.

    Many people argue a good strategy is to have a heap of different trusts in QLD each with one or two IPs to get multiple Land tax thresholds. Even that strategy has dire risks and may be incorrect.

    Careful reading well regarded publications such as Trust Magic etc. These publications do not reflect current lending practices and may well be outdated or not consider current lending policies. If you are contemplating a trust also seek a great broker who knows the market for trust loans.
     
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  6. Seal

    Seal Well-Known Member

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    It will included whose names we own the IP in (joint peronally, or in a trust). and also how this will affect us being able to use equity from the IP over time etc.
     
  7. Seal

    Seal Well-Known Member

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    Very helpful. would there be major benefits of trusts to outweigh the above
     
  8. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    You need legal advice.
     
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