CIP Structures

[Piston Broke]

If this is correct, then I think you would lose the benefit of the CGT discount when you sell CIP as CIP Holding company is not entitled to the discount.
I'm probably missing something.
SYD

Yeah, and?
With all due respect I suggest reading the many discussions on the forum re asset protection.

Can someone elaborate on the DT/UT structure?
Is this having a Unit Trust as a unitholder in a Discretionary Trust, with the property actually owned by the Discretionary trust??
Or the other way round?
What is the advantage of this?
I recall Chris Batten talking about a UT/DT structure for RIPs to allow transfer into a SMSF?

The whole setup was about making interest tax deductable.
But you lose protection, and the ATO don't like it when you want it both ways and when playing funny buggers with units & redemptions.

The concept is that Person borrows from the bank to buy/invest units of a trust (HDT) and that makes the interest tax deductable.
The first unit trust (HDT) then buys units in another trust (UT) witch then buys/owns the RE.

UT
↑
HDT ← trustee
↑
Investor

The idea is that SMSF can also buy units (inject capital) in the UT and thus increase buying power.
Note that this was more useful when SMSFs could'nt borrow money as they now can.

and ftr
http://www.smh.com.au/news/Business...heme-court-told/2005/05/12/1115843314663.html
"Mr Batten told the meeting that the previous year he had earned $1.2 million a month in fees for his tax schemes"
These "trust" thingies are darn good biz for the go get'em hotshot lawyer... I'm gonna signup tomorrow!

 

[SYD]

Just to give you an idea, one of my structures looks like this:
CIP
↑
CIP holder pty ltd
↑
PB trustee pty ltd *
↑
PB trust

Does give it give any guarantees? Nope.
The only above average "feature" is that the only company I'm a director of is PB trustee, which means I have nothing to do with the CIP biz other than managing the ownership on behalf of the trust.
And yeah, It's an expensive setup for some, but that's all relative.

I agree - seems to be a potentially costly structure.

Yeah, and?
With all due respect I suggest reading the many discussions on the forum re asset protection.

Is there anything against asking questions? I'll like to know whether other forum members are using this type of structure.

SYD

 

[Piston Broke]

Is there anything against asking questions? I'll like to know whether other forum members are using this type of structure.
SYD

Dude you can ask wateva questions you want, but nowhere does it say that they have to be answered or that you will like the answers.
This subject has been debated many times on this forum, and many times I posted that asset protection is expensive. And of course the phrase "it's all relative".
If you own a house that rents for $500 on a 90%+ mortgage, it's pretty stupid. (though the "experts" still recommend it).
If it's a CIP worth 5mil with 130k CF+ (as my example in a another post) is 7-8K may not be much to pay to be at "arm's length".
And I'd say there's is a big difference between "holding" and "owning".

Not a good position for your loved ones, when you've given personal guarantees on loans, and you die.

I'll happily assume ownership of the properties of any "loved ones" that do not wish to burden themselves with bank guarantees, and it won't even cost them a dollar!
All they have to do is assign them to the Piston Broke trust in their will.

 

[ILoveProperty]

Can someone elaborate on the DT/UT structure?

Is this having a Unit Trust as a unitholder in a Discretionary Trust, with the property actually owned by the Discretionary trust??

Or the other way round?

What is the advantage of this?

I recall Chris Batten talking about a UT/DT structure for RIPs to allow transfer into a SMSF?

Is the following do-able?

1. UT buys property worth $400k (for eg.)
2. Investor takes out loan for $400k and buys units in UT for $400k
3. In a few years, property is CF+ against initial loan, and has doubled in price.
4. Investors DT now buys $400k units in UT and UT pays out Investors initial $400k units

So while property is CF- the investor -ve gears and then when it goes CF+ the DT distributes the profit?

 

[HiEquity]

Is the following do-able?

1. UT buys property worth $400k (for eg.)
2. Investor takes out loan for $400k and buys units in UT for $400k
3. In a few years, property is CF+ against initial loan, and has doubled in price.
4. Investors DT now buys $400k units in UT and UT pays out Investors initial $400k units

So while property is CF- the investor -ve gears and then when it goes CF+ the DT distributes the profit?

My understanding is that yes it is. However the last step sale of units in the unit trust to the DT would be subject to stamp duty, so you will have paid it twice.