I have been ploughing through tonnes of info on Hybrid Trusts and much of it is conflicting. The latest readings are from Julie Hartman's 'Saving Tax on you Investment Property' and she does not seem to recommend them. She says that the tax benfits are just not there for property investors. Can anyone else advise??
Do Hybrid Trust Give Real Tax Benefits?
- Thread starter Joh
- Start date
HDTs can still provide some benefits, but to be able to borrow to buy the units it seems the deeds have to be drafted in such a way that all the income and CG must go to the unit holder. So there is no discretion until the units are redeemed. And to redeem the units you may be required to pay CGT on any increase in their value. Later on if the trust sell the property the trust may have to pay CGT on the gain as well (or have a CG to distribute).
Because of this, the units (while on issue) may be valued the same as the property held in the trust, thereby negating possible asset protection benefits.
The general consensus on the forum seems to be that if you need the asset protection, go with a discretionary trust and delay the tax benefits.
