Advice please on Trust - Dale

[rie]

hi

we are faced with a bit of a dilemma and i was wondering if Dale or someone else may be able to offer a little advice.
we have 4ips and our PPOR. they have all been purchased in joint names. i am aware of the benefits of a trust, but i am also aware there are costs involved to transfer the Ip's into a trust structure. ( do not want to transfer PPOR at this stage).
we intend on buying more property so i guess our dilemma is, do we go ahead and set up a trust and buy future property in the trust and leave the others, or do we incur all the costs and transfer them over?
for interest sake property values IP's $135K, 75K, 68K & 78k. last one located in NSW , the rest QLD.
thanks, i know this is a question that relates directly to our goals and personal situation, but any advice or suggestions would be helpful.
regards
rie

[geoffw]

:eek: hi

we are faced with a bit of a dilemma and i was wondering if Dale or someone else may be able to offer a little advice.
we have 4ips and our PPOR. they have all been purchased in joint names. i am aware of the benefits of a trust, but i am also aware there are costs involved to transfer the Ip's into a trust structure. ( do not want to transfer PPOR at this stage).
we intend on buying more property so i guess our dilemma is, do we go ahead and set up a trust and buy future property in the trust and leave the others, or do we incur all the costs and transfer them over?
for interest sake property values IP's $135K, 75K, 68K & 78k. last one located in NSW , the rest QLD.
thanks, i know this is a question that relates directly to our goals and personal situation, but any advice or suggestions would be helpful.
regards
rieSwitching an existing property to a trust costs big time. It there's been capital growth, you are liable to Capital Gains Tax; even if you're not, there' stamp duty to be paid all over again.

It's up to you whether these extra costs are worth the benefits. For me they're not, and I've chosen to keep pre-trust IPs out of the trust.

There are people who have chosen to transfer properties to a trust. I don't know, but I suspect, that bthe benefits will be longer term.

[skater]

I, like Geoffw have several IP's that were bought pre trust. The cost for me to transfer them over would be astronomical, so they will stay outside and all new purchases go into the trust.

Cheers

[DaleGG]

HI

There are a numbe rof issues within this question, I am afraid. The costs of moving the properties will include:

stamp duty (in and out perhaps)
legal fees
CGT
bank fees to refinance the loans

So, this will hurt a great deal if you proceed with moving the properties into a trust. It may also stop you from being able to buy more because the costs may affect your borrowing capacity and if this is the case, achieving your dreams may be delayed or hampered which we do not want.

The trust would be good from a long term perspective though.

So, it is a matter of balancing the short term pain and the longer term gains to decide which way is best for you.

Most people, for what it is worth, will leave things the way that they are, and, buy new properties within the trust using the existing ones as security, or, by drawing down against the equity and providing the cash to the trust.

There is no easy answer, but, good luck either way.

Dale

[geoffw]

Dale,

Why didn'y you show me trust before I bought my earlier properties? :D

[rie]

geoffw, skater and dale,
thanks for your responses. i agree, it is an entirely personal choice. dale your comment regarding transfer costs hampering/slowing down future purchases struck a chord with me in as much as i didn't consider that point (der!) anyway i guess my angst lay with the fact that i tend to be a bit of a perfectionist and not having things set up correctly from the beginning has annoyed me a little....
but it doesn't appear to be too much of a problem, having some in trust and others not.
thanks again
rie
ps i love "Tust Magic", so easy to read and info packed!