Hybrid Trust

[Gav&Vale]

Hi All,

We are looking at buying a property on the coast that we will use as an investment from now until we retire in 10 – 15 years.

At that time we will probably demolish and rebuild on the block. As we have a hybrid trust setup for our investment should we buy this property through the trust (and then buy it back off the trust) or buy it in our own names? What are the pros and cons of these and is there another way?

Another way we have thought of is to buy investment in the trust and rent it for the 10 - 15 years and then demolish. After this we then buy the bare block back of the trust at the lands market value and build our home (I would assume we would save a lot capital gains tax!!) How would the Tax Office see this?

 

[Bazza]

If it will eventually be your PPOR I would think it would be a lot less complicated if you just buy it in your own names. I don't see any advantage in putting it through the trust if it is just short term.

Cheers,

Bazza

 

[Peter_Tersteeg]

If you're thinking about investing for retirement, and not selling until then, you may want to consider purchasing through a Self Managed Super Fund. For the moment, SMSF can borrow money to purchase investment properties.

For many people, making volantary contributions to cover the shortfalls is more tax effective than negative gearing. If you sell the property after retirement age, you may be able to avoid CGT altogether.

There are catches of course. You can't live in the property yourself and it may not work well for you depending on your personal and financial circumstances. It does however warent further investigation.

 

[Gav&Vale]

Hi,

Thanks for the answers so far. We should have probably given a bit more info at the begining. We are in our early thirties and are planning to retire in our mid forties so it will be about another 35 years until we can access our super, which is why we are only adding another 7.5% of our gross salaries to super (on top of our employer contributions) and using the rest of our money for property/shares etc. Not sure if this affects your answers or not!

 

[alexlee]

What are you planning to live on once you retire?

 

[Gav&Vale]

Will be supported by IP rents and share dividends.