Hi All,
This forum has been a wealth of information for a novice such as myself and reading the posts of many insightful posters has led to me do some research on tax structures.
Since a lot of you are very experienced with the tax structures, it would be very helpful if you could review this structure I came up for a property investment group with close family (myself, parents, uncle and cousin).
Of the above, all of us have used our FHOG other than my cousin who hasnt bought a property as yet but still wants to invest in a property while retaining the FHOG and stamp duty exemption for his first PPOR.
Since we are living in NSW, Land tax is a very important issue for us as paying 1.7% of the value of the land is quite hefty especially if there is no threshold.
From what I have read so far, the best structure would be having a Fixed Unit Trust since it is still eligible for the Land tax threshold. The particular trust I was looking at was one provided by Patricia Holdings.
http://www.patricia.com.au/page/unit_trusts/
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It would be very much appreciated if you could point me to the right direction and comment on the structure I have posted above and if it would work or not.
A few questions I have include:
1. All of us have PAYG jobs and are not in much danger of being sued other than my dad (Individual C), who is trying to start out in the development game. That is why in the prospective structure I appointed my mum (Individual D) who will only own 1% of the units and does not have any income as trustee of the unit trust. Will this affect any borrowings as she does not have any income?
2. I read somewhere on the forum that negative gearing is possible with a unit trust where the individuals borrow to buy the units in the trust as long as the trust deed mentions that the units have to be redeemed at market value instead of at cost. Is this possible with the above trust, and if so can the four of us borrow and negative gear the property initially?
3. I called the OSR about the land tax threshold for the Fixed Unit Trust and they advised that if a Discretionary Trust was a unit holder of the trust, then there would be no threshold. Is this correct or does the Unit trust have to be the sole unit holder of the trust?
4. Who should the appointer be?
5. As stated above, my cousin has never purchased a property before. With the above structure, will he be able to claim the FHOG and stamp duty exemption when he purchases his PPOR (If he had purchased an IP in his own name, in which he had never lived in, he would be eligible for the FHOG but not have stamp duty exemption)?
6. How much would it cost to set-up this structure? Are the only costs the cost of a Trust Deed ($258.5) and getting those deed stamped ($530)? I am not worried about ongoing costs as I can do the tax return and accounts myself since I work in an accounting firm as a cadet.
Thanks for all your help.
Cheers,
Kaiser Iqbal
This forum has been a wealth of information for a novice such as myself and reading the posts of many insightful posters has led to me do some research on tax structures.
Since a lot of you are very experienced with the tax structures, it would be very helpful if you could review this structure I came up for a property investment group with close family (myself, parents, uncle and cousin).
Of the above, all of us have used our FHOG other than my cousin who hasnt bought a property as yet but still wants to invest in a property while retaining the FHOG and stamp duty exemption for his first PPOR.
Since we are living in NSW, Land tax is a very important issue for us as paying 1.7% of the value of the land is quite hefty especially if there is no threshold.
From what I have read so far, the best structure would be having a Fixed Unit Trust since it is still eligible for the Land tax threshold. The particular trust I was looking at was one provided by Patricia Holdings.
http://www.patricia.com.au/page/unit_trusts/
It would be very much appreciated if you could point me to the right direction and comment on the structure I have posted above and if it would work or not.
A few questions I have include:
1. All of us have PAYG jobs and are not in much danger of being sued other than my dad (Individual C), who is trying to start out in the development game. That is why in the prospective structure I appointed my mum (Individual D) who will only own 1% of the units and does not have any income as trustee of the unit trust. Will this affect any borrowings as she does not have any income?
2. I read somewhere on the forum that negative gearing is possible with a unit trust where the individuals borrow to buy the units in the trust as long as the trust deed mentions that the units have to be redeemed at market value instead of at cost. Is this possible with the above trust, and if so can the four of us borrow and negative gear the property initially?
3. I called the OSR about the land tax threshold for the Fixed Unit Trust and they advised that if a Discretionary Trust was a unit holder of the trust, then there would be no threshold. Is this correct or does the Unit trust have to be the sole unit holder of the trust?
4. Who should the appointer be?
5. As stated above, my cousin has never purchased a property before. With the above structure, will he be able to claim the FHOG and stamp duty exemption when he purchases his PPOR (If he had purchased an IP in his own name, in which he had never lived in, he would be eligible for the FHOG but not have stamp duty exemption)?
6. How much would it cost to set-up this structure? Are the only costs the cost of a Trust Deed ($258.5) and getting those deed stamped ($530)? I am not worried about ongoing costs as I can do the tax return and accounts myself since I work in an accounting firm as a cadet.
Thanks for all your help.
Cheers,
Kaiser Iqbal
