Transferring property to a discretionary trust

Discussion in 'Investment Strategy' started by Snake009875, 19th Apr, 2021.

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  1. Snake009875

    Snake009875 New Member

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    Hi all,

    I have purchased a property in QLD under my personal name. At the time of acquisition, I have paid stamp duty based on the contract price. Over the time, I learnt that serviceability decreases from this set up and that it also doesn't provide me asset protection as a Trust.

    Therefore, I am looking to transfer this property into a discretionary/family trust (with a corporate trustee that I am the director of) that I have already set up.

    Can anyone advise of their similar experiences and whether this has triggered for stamp duty for the transfer? I am not concerned on CGT because I don't believe there's any gains in the current market.

    Thanks
     
  2. Terry_w

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

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    It will trigger duty and CGT.
    You should seek legal advice on how to structure the transaction too. Probably should be a sale and purchase at market value. If you have set up the trust, you should get legal advice on the terms of the trust and the structure of the company too - if you haven't already.
     
  3. Snake009875

    Snake009875 New Member

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    Can you refer someone?
     
  4. Trainee

    Trainee Well-Known Member

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    Why do you think you need asset protection?
    Is the property mortgaged?
     
  5. Momentum

    Momentum Well-Known Member

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    I wouldn't bother. Trusts aren't worth the time or money for 95% of people. Been there, done that
     
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  6. Paul@PAS

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

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    The trust may end up with quarantined tax losses. Trusts must carry forward tax losses. If it has other types of income that can change this and many advisers really dont understand it well. I hear from many that a trust must be able to distribute $1 of trust income and cant do that with a overall loss. This is NOT always true. If the trust can produce a small CGT gain, foreign income etc then it may well be able to distribute a income loss stapled to the CGT amount. Half decent tax planning with a trust proficent adviser would be wise. DIY trust establishment IMO is a red flag and may even limit advice.

    Many people think assets are protected when a beneficiary lends $$$ to a trust so it can buy property. However their loan to the trust is a substitute personal asset and its not well protected. It may even lead to action against the trustee by a creditor etc

    There is no magic asset protection to a trust in many cases. Seeking legal advice may address the costs exceed benefits. Even the annual accounting and tax costs bear a issue that may mean its not worthwhile

    Yes it is a CGT and stamp duty trigger. The costbase could even exceed the property value since the transaction costs will be added. This could produce negative equity in the trust
     
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  7. Calder&Scale

    Calder&Scale Well-Known Member

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    Is it difficult to finance property within a trust?
     
  8. Clean Cookie

    Clean Cookie Well-Known Member

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    There's a variety of ways.

    Gift money in
    Formal loan agreement
    Equity in assets in trust.
    I chose the gift option for our situation.

    Be aware of land tax and upkeep fees
     
  9. Terry_w

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

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    No
     

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