I Have Heard That You Lose Your Negative Gearing Tax Benefits In A Property Trust. Is
Yes that is true (subject to two exceptions).
In a family discretionary trust, you will lose your negative gearing benefits because
you have to claim them in the trust, not in your own name. This is a problem if you
are a high income earner.
There are, however, three ways to avoid this:
* Multiple Trusts. If you earn income from share trading or internet marketing
or any business income through the same trust as your negatively geared
property, or through other trusts, you can shift some or all of that income
into your property trust to offset against the negatively geared property loss.
So for example, if you have a $15,000 negative gearing loss, and you make a
profit of $20,000 from share trading in another trust, just shift $15,000
of that income into the property trust, and you will only pay tax on $5,000.
* Hybrid Trust. This is discussed below.
* Family Discretionary Trust with Loan Agreement. You borrow the money
in the name of the high income earner and lend it into the trust at a
commercial interest rate.
Speak to one of our specialists further about these options.
* You own your house in your own name (or your partner's name)
* You own your house in a family trust with no loan agreement
* You own your house in a hybrid trust simply because your accountant or lawyer said that you had to to get your negative gearing deductions
If you are in ANY of these situations, then not only are you at SERIOUS risk of losing your property in a lawsuit (ESPECIALLY if you are in business), but you may get into trouble if the Tax Office audits you down the track.
Once you sell your property, you no longer own it, the borrowed funds are not used for earning income, therefore you cannot claim income nor expenses.
BS from that site:
"here is a unique Tax Intelligence™ trick"
There is no such thing as a "unique trick", there's different ways to do the same thing through different entities. But there's only one way of getting NG tax deductions.
It also says "In a hybrid trust, you do not own the property", the implication seems to be as if it was different in a DT, when it is'nt.
And of course if you negative gearing, you are not achieving asset protection.
mx5 why not ask them who wrote their trust deeds?
His website claims that:
"FREE Bonus Gift #1 — ($397.00 Value)
Claim your Audio version of Napoleon Hill's classic book “Think And Grow Rich”! That's over 6 hours of wealth creation material to listen to!"
Which is big lie, it's not worth that much. It seels new on amazon for us $15.61.
Just another get rich seminar group.
I think, by the way you have worded this, that you may not understand the process fully.
Try to think of the trust a a person, A.
If you sell to A, A borrows to buy the property. A can claim the interest and all associated costs if it is an IP. When A gives you the money it is just the proceeds of the sale of your property. You have the funds and can do with them what you like.
There's a lot of traps involved in this, and most of the time it isn't feasible. Only one case got through with this, Janmor Nominees, and that was before Part IVA. The ATO treats these schemes as tax avoidance and you need to have very solid paperwork to cover yourself.