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Ownership doesnt change whether depreciation can be claimed or not.
Whether that claim is stuck in the trust or can be claimed against your personal salary depends on the type of trust.
DT, we are buying under a discretionary trust (company trust), where we are the trustee of this company
My understanding is that the Trust claims the depreciation and can use it to reduce it's income.
based on this, depreciation is still applicable to reduce its income (rent collected), right?
However, under trust system, you cannot negative gear, is that right?
There is one type of Trust where you can negative gear your personal income but it's not very common. I'm trying to remember it's name. ummmm darn it sorry - but it's not a discretionary trust.
Think of the trust as a third person, but they are a puppet and you control them.
That third person owns the property, you don't.
The third person will also get all the normal tax deductions associated with any property they own.
As the puppeteer, when they make an overall profit, you take it away from them. If they make an overall loss however, you're expected to cover that loss.
, even though your the trustee of this trust.
You can't negative gear against the trustee's income, but you can negative gear against other income that the trust might earn, such as dividend income from shares (probably not a great example because there's usually franking credits involved to make it complicated).
In most cases with trusts, the negative gearing effect results in losses. These losses are held within the trust until it makes profit at which time they can be used to reduce the taxable profit.
No you're not the trustee, the company is.
Ok, sorry for my ignorance on this matter
So, I am buying under xxx PTY LTD, where XXX family trust is the trustee.
Am I not the trustee here?
Buy the property as "abc pty ltd as trustee for xyz family trust"
xyz family trust is the trust
abc pty ltd is the trustee
Ok, sorry for my ignorance on this matter
So, I am buying under xxx PTY LTD, where XXX family trust is the trustee.
Am I not the trustee here?
Not really, the company is buying it as the trustee for the trust. It's a fairly vague distinction, but it is important.
You don't actually need a company to be the trustee, it can be done as an individual. You can buy the property under, "LoanWolf as trustee for XYZ Trust". There's a lot of reasons why you shouldn't do this though.