Buying units in trust

[Panda]

Hi all,
In order to neg gear a property in a HDT I understand the process to be,

1. Bank lends me money
2. I buy units in trust
3. Trust buys property
4. Income and expenses flow down into personal income tax assessment

My question is what documentation is involved in the buying of the units in the trust. Is it just a automatic thing that happens when the loan is in the trustee (individuals) name and the property is in the trust? or is there another document that specifies units purchased?


I am trying to determine if my loans and property are set up correctly for this.

- The loan is in my name
- The property is the trusts
- The trust deed should be fine as I had a very good NSW accountant set it up with this in mind. Its just after I had it set up I swapped accountants and I have now found that the profit and loss of the trust has not been accounted for in my personal return.

Any comments would be a great help.

Cheers
Panda

 

[Mry]

My question is what documentation is involved in the buying of the units in the trust. Is it just a automatic thing that happens when the loan is in the trustee (individuals) name and the property is in the trust? or is there another document that specifies units purchased?

If you bought a HDT, the forms to issue the units are located in the deed. They must be issued. If they aren't, you don't have the right to claim interest in your return. If you don't have them, you can get your accountant to give you some photocopied unit issue notices from another deed or contact the person who sold you the deed and ask why you didn't get them.

I am trying to determine if my loans and property are set up correctly for this.

Get an accountant to look over things for you. We can't really do that here. From what you have said it looks ok but there is a lot more involved that needs to be checked.

 

[Panda]

Hi Mry,
Thank you for your response. I do understand that this forum is not about specific advice and is general in nature.

Really what I’m asking is about the actual documentation that is involved when issuing special income units in the HDtrust. It seems to me that this is a matter that is determined by the trustee alone, no third party is required. The documentation as far as I can see is filling out an application for special units which also outlines the rights to the holders and then also issuing a certificate of special income units along with maintaining a register of unit holders.

My query is, is that it? is there any third party registration or any other thing that needs to happen? It would seem that this is simply a question of form filling and filing by the trustee and that’s it?

I’ve been going over the trust deed and it specifies that the trustee has the right to issue "special Units" at any time to any person including a beneficiary. Therefore, I think that I can conclude from that that,

- The trustee issues the units at the trustees discretion as long as it abides by the powers of the trustee
- The actual documentation involved is as described above
- There is no third party involved

Anyway thank you for your comments.

Cheers,
Panda

 

[redwing]

Hi Panda

If you dont have Dale's book "Trust Magic" I suggest you purchase it as he gives examples of many of the processes using Minutes.

From your earlier post you've had the HDTwith property for a while and need to get on top of this ASAP, if you are overly concerned contact Dale, I've found him to be very approachable

Redwing

 

[Panda]

Thanks Redwing,
I just found and read that section. I missed that. I was reading pages 118-119. I think I'll read the whole book again.

Thanks for your comments.


Cheers,
Panda