First Home Owners Grant/Trust

I am a first home buyer and will be living in the residence for the first 6 months to be eligible to claim the grant.

After 6 months, I would like to rent this property out.

Question 1: If i wanted to transfer this property into a brand new trust after the initial 6 months what fees would be associated with this? Any stamp duty involved?


Question 2: Am i able to rent the property from that trust where I am the trustee to potentially reduce tax paid on interest?

Regards
 
I am a first home buyer and will be living in the residence for the first 6 months to be eligible to claim the grant.

After 6 months, I would like to rent this property out.

Question 1: If i wanted to transfer this property into a brand new trust after the initial 6 months what fees would be associated with this? Any stamp duty involved?


Question 2: Am i able to rent the property from that trust where I am the trustee to potentially reduce tax paid on interest?

Regards

Why do you need it in a trust?
 
Reason to open a trust would be because I would like to pay for my property before tax.

I assume I need an ABN to claim the interest as a tax deduction.
 
How do you plan on claiming the tax losses if you put it into a trust and it's negatively geared?

Renting a property owned by a trust you control is looked at very carefully by the ATO.

Why not play it straight and simple? Buy an IP in your own name instead and rent.
 
Fair call.

Although as I am looking to purchase further properties down the track (portfolio of over 10 properties). If they are all in my name I hear it is putting unnecessary risk on myself?

I have to say I am not clear on how structures (trusts, etc) work.

Many seminars I have been attending on property investing tend to focus on making sure all properties are not cross collaterilised with one another.

Maybe I should say, What is the benefit of trusts if you are a property investor?
 
Although as I am looking to purchase further properties down the track (portfolio of over 10 properties). If they are all in my name I hear it is putting unnecessary risk on myself?

Possibly, but there are ways of mitigating these. But you can always buy in other entities for future properties. You're suggesting buying your PPOR in a trust and renting it back. That's a whole different kettle of fish.

Many seminars I have been attending on property investing tend to focus on making sure all properties are not cross collaterilised with one another.

True, but that has nothing to do with what you're talking about here.

Seminars that involve accountants often tout the benefits of a trust. In some cases, this may not be necessary.

Maybe I should say, What is the benefit of trusts if you are a property investor?

Honestly, you don't know enough to understand the answers right now. I suggest reading a few basic books first. For example, do you understand income streaming, land tax thresholds, the issues with negative gearing in trusts? If not, you don't have enough knowledge to use a trust. Stick to buying the first one in your own name, and learn as you go. After you develop more knowledge and decide a trust is better, buy future ips in whatever entity you decide is best.
 
Read the Jan Somers books, to start with. Forget about trusts for the time being. You need to understand negative gearing and how to build a portfolio first.
 
Transferring a property into a trust will cost you full stamp duty and legals - all up a considerable cost. You will also need to pay loan exit fees and get a new loan.

Once it is in the trust you could rent it, but it is likely that there will be a large loss. This loss belongs to the trust, so it will not help you save any tax off your personal income. If you are self employment you may be able to divert income into the trust to offset your losses and this should help you save tax, but this is not really possible for paye earners.
 
And CGT on any capital gain made in the 6 months. If you sell (dispose) of it in 6 months, you may be liable for full CGT and not get a 50% reduction.
 
And CGT on any capital gain made in the 6 months. If you sell (dispose) of it in 6 months, you may be liable for full CGT and not get a 50% reduction.

Sounds like he is going to live in the place first, so it would probably qualify as the main residence and be CGT exempt.
 
Like Alex said, start slowly and educate yourself. If you rush into a Trust and then decide that it is not for you, you may well find it an expensive lesson to unwind. Best to understand the structures first and then see if they apply to your situation.
 
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