Buying farm land through a trust

[johnsquire]

Basically the wife and I are buying some farm land as an investment, which we intend to lease to another farmer.

We both work at the moment, but the plan is to go bush/feral in a year or two and live a subsistence lifestyle - supplemented by the modest income received by leasing the farm land. Any other income will be very minimal (we'll subsisting/bartering!)

Is there any benefit to be had by forming a trust to buy the farm land?

 

[RPI]

Distribution of income and asset protection can be pluses

Inability to negative gear and land tax can be negatives.

Could it ever be a PPOR or is it too large. That might also weigh.

Above are just a few considerations.

Going to see Terry W looks like it would be a great return on investment in your case

 

[johnsquire]

I should add - the land will be purchased outright with no debt.

We likely won't be living on the land mentioned, but this might change at some point.

 

[Paul@PFI]

A SMSF can be used to own a farm. The farm can include a limited area for the personal residence of the farmer and it is still permitted If you have surplus cash and it fits in with limits then you may consider financial advice on the tax (free??) merits of a farm in super...Depends on a range of issues.

Coming back to a trust...Almost 40% of farms in Australia are held in a trust. Loads of merits over personal ownership.

Personal advice is a must.

 

[redwing]

How big is the farm (hobby or commercial)?

Are there any children?

i.e. Are you looking at the trust for succession planning?

 

[johnsquire]

Commercial farm - cropping.

We may have children, but succession planning is not a factor.

 

[johnsquire]

Given that the income from the farm is unlikely to ever exceed the tax-free threshold (~$18K P.A.), and we won't have much other income, I guess reducing tax is probably not a big factor either?

Are there other reasons to use a trust?

 

[Terry_w]

Given that the income from the farm is unlikely to ever exceed the tax-free threshold (~$18K P.A.), and we won't have much other income, I guess reducing tax is probably not a big factor either?

Are there other reasons to use a trust?

2 more potential benefits:

A trust may reduce risk of your other assets being seized - contracting with workers, suppliers etc could lead to disputes which could lead to litigation.

Passing on control to others without changing title.