In what Structure do you own your IPs?

[Phiber]

Hi guys,

I have a couple of IPs and thinking of getting a third one very soon.
I currently own both IPs in my own name and thinking whether it would be a smart move to acquire the next IPs in a different structure (trust or else).

Being still single at this stage (and at the beginning of my investment adventure), I am thinking asset protection for whatever the future has planned for me as well as tax deductions where possible.

I'll be meeting my accountant in a couple of days but was wondering what you guys were holding your IPs into, to give me some ideas and more perspective.

Cheers

 

[Rolf Latham]

else).

Being still single at this stage (and at the beginning of my investment adventure), I am thinking asset protection for whatever the future has planned for me as well as tax deductions where possible.

tough combo

Hybrid Discretionary trust, but getting hard to get finance for

DT no neg gearing

Unit trust, negligible asset protection ?

ta
rolf

 

[Aaron_C]

I do have companies/trust structures but they are for the bigger properties. For your typical residential investment it is rarely worth the hassle in my view - although many lawyers would disagree with me.

 

[Terry_w]

I see a mixture

Joint ownership whether JT or TIC, single ownership in non risk spouse name, unit trusts, fixed unit trusts, discretionary trusts and now SMSFs. Some trusts with corporate trustees others with individual trustees.

From an asset protection point of view many of the structures set up are poorly done too.

 

[nathank]

MGS unit trusts from now on, when its cash flow positive, i'll sell the units into a DT for income distribution to lower income earner or into my Super.

No more in my own name.

 

[HotRod]

All mine are in personal ownership.

Could see no need to put them a structure that would cost me for no benefit. Had the properties 50/50 with the missus so when I finally pull the plug, all the income will be split 50/50, exactly the same as if they were in a trust.

Reading books from the US they say to put them in trusts, but that's more for asset protection in their litigious country. People getting sued for millions for a tenant slipping on water in the bathroom or some nonsense like that.

Here in Oz the questions about trusts centre more on income distribution.

 

[Phiber]

Hi guys,

Thanks for the great replies - I see you guys have way more knowledge than I do on the topic. I have read on the forum that quite a number of people seem to be keen on keeping things simple and under their name.
Although I like simple, I tend to be pretty risk averse when it comes to these sorts of things, hence me looking at more complex (and costly) options.

I am seeing my accountant first thing tomorrow - I'll report here on his suggestions - keen to hear your feedback!

Terry - from previous posts in other threads, I know your wealth of knowledge in this area is vast: would you be ok if I was to contact you by PM?

Thanks guys

 

[Terry_w]

Terry - from previous posts in other threads, I know your wealth of knowledge in this area is vast: would you be ok if I was to contact you by PM?

Thanks guys

Fire away!

 

[Cherry Pro]

Hi

If I was going to purchase, do a quick reno and flip, would it better for me to buy in company / trust structure to reduce capital gains tax, assuming our personal income tax level is around 30% mark.

Thanks

 

[Terry_w]

Hi

If I was going to purchase, do a quick reno and flip, would it better for me to buy in company / trust structure to reduce capital gains tax, assuming our personal income tax level is around 30% mark.

Thanks

That would entirely depend on your overall situation. Maybe.

 

[jrc77]

Since we are talking purchasing structures here - may as well jump on the bandwagon. I see Terry mention in other threads that in NSW stamp duty is being removed on the transfer of units for a unit trust.

Assuming that you had already exhausted your land tax free threshold and you were purchasing a slightly negatively geared property, would a viable strategy now be to purchase it in a unit trust with the highest income earner as the unit holder (so can claim negatively gearing benefits) and then later when the property becomes positively geared either transfer the units to a discretionary trust or to a SMSF?

Regards,

Jason

 

[devank]

I assume there is CG tax involved in this transfer. Is it still worht it if the higher income earner needs to pay the CGT?

 

[Aaron_C]

For a quick reno and flip - a family trust might be OK as long as you hold the property for longer than a year to get the CGT discount.

 

[Terry_w]

Since we are talking purchasing structures here - may as well jump on the bandwagon. I see Terry mention in other threads that in NSW stamp duty is being removed on the transfer of units for a unit trust.

Assuming that you had already exhausted your land tax free threshold and you were purchasing a slightly negatively geared property, would a viable strategy now be to purchase it in a unit trust with the highest income earner as the unit holder (so can claim negatively gearing benefits) and then later when the property becomes positively geared either transfer the units to a discretionary trust or to a SMSF?

Regards,

Jason

Yes, many are set up this way for this exact reason. But remember that the stamp duty on the transfer of shares/units was supposed to be abolished this july, but the government pushed it back one year. So there is a risk that it won't be abolished as planned.

The transfer of units would be a CGT event too.

 

[Phiber]

Hi guys,

Thanks for all the replies, great stuff!
After having a chat with the accountant, according to him holding property in trusts and such seems not to offer much more protection as it appears that courts can see through these especially in spouses related issues.
And with trusts not allowing for the land tax threshold, I think I will keep things under my name so far until I reach the $390K limit, and will reconsider then.
Just need to protect myself with a prenup when I get into a relationship.

Thanks again for the good feedback

 

[Terry_w]

Hi guys,

Thanks for all the replies, great stuff!
After having a chat with the accountant, according to him holding property in trusts and such seems not to offer much more protection as it appears that courts can see through these especially in spouses related issues.
And with trusts not allowing for the land tax threshold, I think I will keep things under my name so far until I reach the $390K limit, and will reconsider then.
Just need to protect myself with a prenup when I get into a relationship.

Thanks again for the good feedback

I think you need a new accountant or shouldn't be asking him/her for legal advice.

A beneficiary of a discretionary trust has no entitlement to the assets of the trust, just the right to be considered by the trustee. This offers the greatest asset protection available. But the family court has powers to make orders on third parties such as trustees, so the asset protection is not as strong in family law matters.

Using a fixed trust in NSW can enable you to get the land tax free threshold. Similar in other states.

A prenup, of a binding financial agreement is good, but can be void in many respects.

 

[Aaron_C]

Trusts are good for the large properties. For small little $100,000 things there isn't as much incentive to get so much structuring involved.

 

[Phiber]

Hi Terry,

Thanks for your reply, I have sent you a PM, keen to go deeper on this.
Glad I asked my questions here.

Cheers