Top tax bracket earners: Trust vs Personal name

Hi, im after some advice about how to purchase my 3rd investment property. My first two have been purchased in my name and are positively geared, however once the depreciation schedule kicks in they are negatively geared. The benefits of this are, tax deductions and improved cash flow in the short term, but more tax to pay in the future. I've been advised by my accountant that this was a 'silly' way to purchase and I should have purchased in a trust, where even though I wouldn't be able to have the tax deduction benefits, my cash flow would be better in the long term as I would be able to redistribute to someone else on a lower income bracket. Im currently in the top income tax bracket, with my salary doubling in 2.5 years when I complete my training program. My thoughts are that at the moment, cash flow to facilitate further investments are more important than future cash flow. My second thought is that I should be trying to maximise tax deductions, therefore purchasing in my own name. Would anyone who has come up against this dilemma before care to share their thoughts.

 

A critical part here is, are you going to sell? If you do then CGT payable when held in your own name compared to a trust with ability to distribute to others or other entities.

 

A bird in the hand or two in the bush.

As long as you understand the costs and benefits of a strategy with eyes wide open that is fine. The rest is a value judgement.

 

Once properly qualified (assuming medical), then are you going to have a mix of income sources. A future clinic may be operated through a trust structure, assuming it is indeed a business and not just your Personal Services Income, then the profits from that may be distributed to a trust that has been accumulating losses from it's property investment.

 

You also need to consider other implications of purchasing through a trust. There's some additional ongoing costs like an extra tax return and ASIC fees. Most people forget that there can be different land tax charges when a corporate trustee is involved. This can be a significant additional expense.

 

Get some proper advice as lots to consider.