Purposefully misrepresenting my
position?
Hello Mry. No. Your position is very clear. You don't like HDTs.
I would like HDTs, if they worked as promised.
Exactly. You don't like them because you don't think they work as promised. Who exactly made these promises to you? Let me make a 'promise'. The HDT provides the following benefits...
- Negative Gearing
- Estate Planning
- Anonymity of Assets using Corporate Trustee
- Land Tax Threshold (except NSW/VIC)
- Does not vest after 80 years (Chan&Naylor HDT only)
- Flexibility
Would you like to argue against any of those benefits? You like to pick at one other perceived benefit, state that this one doesn't really work, and then use this to suggest that all HDTs are 'bad'.
This would be like if I bought a new car, and I told you it was inexpensive, efficient, environmentally friendly, fast, luxurious and looked great. Then you come along and say, "yeah, but it can't fly... that car is no good". Who cares if it can't fly. That's not why I bought it!
A fortune? A few thousand dollars out of a multi-million dollar property portfolio growing by hundreds of thousands of dollars a year? Accounting fees are irrelevant.
An investment strategy does that, a HDT does not.
Exactly. The cost of running the HDT is irrelevant compared to the amount of money that an investment property portfolio and strategy can generate.
Don't you know the difference?
The difference between what and what? Please explain. Are you seriously asking me if I know the difference between a HDT and an investment strategy? I think if you read my posts it is quite clear that I have a strategy and I also have a HDT. No they are not one and the same. My strategy is not just 'get a HDT and hope for the best'. I was well aware of the asset protection limitations with HDTs. Asset protection is not an issue for me.
My strategy is based on Living on Equity. I use a HDT to hold my assets.
I want to Negative Gear today, and I plan to Live on Equity in the future. At the same time I want to be able to easily pass assets to my children, and I want the flexibility to easily change my strategy in the future if my circumstances change. The HDT is the perfect structure to achieve these benefits.
My problem is that one day people were arguing you could redeem them at cost or cost plus something. The next day you have to pay CGT on a much higher value.
You don't have to pay CGT if you don't redeem the units. For those us who follow a 'Living On Equity' strategy, this is ideal.
If there's no difference on CGT treatment, which we both agree on, why spend close to $10,000 in fees over seven years during that crucial initial investment phase when you don't need to? You could use that to pay down debt, do a reno and grow your rental yield, build a deposit, etc.
Depends on the user. For someone who is happy to keep a very small property portfolio, perhaps just one investment unit, then $10K may be a big issue. But I think many people on this forum have aspirations to control a much larger portfolio. I would say $10K over seven years is an irrelevantly small sum of money for those people (and accountancy fees are tax-deductible anyway). Those are the sort of people for whom a HDT is very useful. Like I said before, a HDT is not for everybody, but for people who have the following characteristics, the HDT is perfect...
- Low-risk profession
- Reasonably good income (want to Negative Gear)
- Plan to grow a large investment portfolio (multi-million dollar)
- Want to easily pass properties down to children
- Require a very
Flexible Structure
The main benefits of the HDT are:
- Negative Gearing
- Estate Planning
- Anonymity of Assets using Corporate Trustee
- Land Tax Threshold (except NSW/VIC)
- Does not vest after 80 years (Chan&Naylor HDT only)
- Flexibility to
a) Keep the Units, and let the portfolio become cash flow positive, streaming all income to the Unit holder. The structure now operates the same as if the properties had originally been purchased in the user's personal name.
b) Redeem the Units at Market Value and pay the relevant Capital Gains Tax. The structure now operates in the same way as a normal Discretionary Trust and income can be streamed as appropriate.
c) Keep the units, buy more property and continue to run a negatively geared portfolio, living off the equity. This way you get the best of both worlds... you keep the negative gearing benefit and there is no CGT event, so it does not matter that the Units are worth 'market value'.
Cheers,
Shadow.